Howzat! India: SEBI delivers new GB Regs: Pitched in line with international best practice: Look for the bounce in local markets.

Howzat! India: SEBI delivers new GB Regs: Pitched in line with international best practice: Look for the bounce in local markets.  

New guidance will provide additional certainty for issuers and investors.

We expect this to catalyse further growth in the already significant Indian green bond market.


What’s it all about?

The Securities and Exchange Board of India (SEBI), the capital markets regulator, has just issued its "Disclosure Requirements for Issuance and Listing of Green Debt Securities."

The notification is in the form of a public circular addressed to issuers, stock exchanges and merchant bankers.

In December 2015, SEBI issued a discussion paper called "Concept paper for issuance of Green Bonds.’

A month later, it announced a Board decision to distribute "Disclosure Requirements for issuance and listing Green Bonds."

We commented on the earlier draft of the regulations here. The draft regulations originally went to the Ministry of Finance for comment, where they languished for some time with internal debate about the extent to which they should be India-specific, or whether they should be prescriptive on green definitions, etc.

A couple of months ago a draft left the Ministry of Finance to the Ministry for Renewable Energy for comment, and now they’re out.

Great to see.

We expect this to catalyse further growth in the already significant Indian green bond market.


Key points of SEBI’s green bond listing requirements:

What is green

The guidelines set out a list of high-level categories for what is green. This is a further step on the earlier draft that stated that the same would be decided on a case to case basis.

The broad categories that have been outlined are in line with international practice i.e. Green Bond Principles (GBPs) and Climate Bonds Standards, although the regulator also retains the discretion to specify further categories as they arise.


Appointment of an independent Reviewer/ Certifier

As per the Green Bond Principles (GBPs), using a second party review or third-party certification to review the green credentials of the bond is optional.

Using a third party/ external review is regarded as “best practice”, as many investors do not have the resources to do the requisite due diligence and would thus prefer to an external review to be done.

However, many country guidelines do not mandate an external review (although for example PBOC in China makes it clear it expects one).


Tracking of proceeds

Issuers are required to disclose the procedures they will use to track green bond proceeds, and get this verified by external auditors.

SEBI is requiring issuers to report on this half yearly. While PBOC in China requires quarterly reporting, the global trend is for annual reporting.

Some of the other disclosures needed are a statement on the environmental objectives of the issue of the green bond, qualitative performance indicators and, where feasible, quantitative performance measures of the environmental impact of the project(s) and/or the asset(s).

The methodology used to determine that impact, along with relevant assumptions, also needs to be disclosed.



Overall, SEBI’s final guidelines are in line with the GBPs/Climate Bonds Standard in terms of issuance process and high-level categories of what is green, paving the way for seamless issuances across multiple geographies.

India’s is a fast-growing market when it comes to green bonds; it was the 7th largest issuer in 2016, and in 2017 has maintained its ranking in the Top 10 of global green bond issuers. 

Given the government’s impressive renewable energy targets, ambitious plans for improved water management and waste management, and a massive programme of upgrading and building low carbon transport in particular rail infrastructure, we’re expecting further green bond issuance.


The Last Word

India’s capital markets are highly guided by regulators.

The new green bond regulations can be expected to be a catalyst for market development, and we hope to see the same incredible results that happened after China’s official guidelines were published.


'Till next time

Climate Bonds


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