The Daily Brief Are RBI’s Green Bonds a flop?
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Dec 3, 2024 India’s green bonds are struggling due to poor auction performances and low investor interest. Factors such as low yields and limited liquidity are contributing to this dilemma, highlighting the need for fresh strategies to make them more attractive. The podcast also discusses new RBI guidelines affecting co-branded credit cards, revealing how they impact partners and the wider economic landscape, including Bajaj Finance's exit from this market. Trends in luxury markets and battery manufacturing add further depth to the economic conversation.
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India's Green Bond Challenge
- India's green bonds, meant for sustainable projects, faced low demand in a recent auction.
- This signals a fundamental issue with India's green finance approach.
Green Bonds' Lack of Appeal
- Green bonds offer lower returns and liquidity compared to government securities.
- Investors lack incentives to choose green bonds, as they are harder to sell.
Boosting Green Bond Appeal
- Governments should create incentives like mandates or tie green bonds to national priorities.
- This would make them more appealing to investors and drive demand.