State Bank of India planning $3 bn green bonds

MUMBAI: India’s largest lender plans to raise up to $3 billion in the country’s biggest overseas green-bond issue, tapping the likes of BlackRock, International Finance Corp and JPMorgan-backed entities for funding projects that will help achieve the government’s commitments toward sustainable growth.

“State Bank of India has internally approved the mega fund-raising plan and also obtained the approval from a global adjudicating authority on green bonds,” an executive close to the initiative told ET.

The Mumbai-based, government-owned lender is in the process of appointing investment bankers who will help raise cash for the dedicated fund in a few instalments over one or two quarters, said another executive close to the development. Investor demand for the instruments will decide the timing and issue size for each instalment, said the second executive.



Request for Proposal Floated
SBI didn’t respond to queries. Individual investors and bankers could not be contacted immediately. Sources told ET that road shows for the bond issue will likely begin in the next few weeks and cover global financial centres such as London.

The bank is now compliant with global standards as prescribed by the Climate Bonds Initiative, an international investor-focused charity. The non-government, non-profit ensures compliance standards for green bond funds, and is working solely on mobilising the $100-trillion debt market for climatechange solutions.

Green bonds are gaining momentum globally as proceeds will fund green energy projects that do not emit toxic pollutants, a key threat to maintaining the world’s ambient temperatures at manageable levels.

Sandeep Bhattacharya, India projects manager at Climate Bonds Initiative, declined to disclose client-specific details.

“Many large Indian entities are showing interest in floating green bonds as the country itself will have huge fund requirements for clean energy projects,” Bhattacharya said. “Globally, institutional investors have started earmarking a section of deployable funds for green bonds. Indian issuers are likely to be a big beneficiary of that.”

SBI earlier told the government it would help finance viable renewable energy projects worth rS 81,600 crore over the five years between 2015 and 2020.

“Standard Chartered Bank is helping, educating them on global green bond trends,” said another person aware of the matter.

SBI had already floated the Request for Proposal, a formality before investment bankers are appointed officially. “The purpose of the green bond framework is to draw a road map to issue green bonds and to use the proceeds for green projects falling under the ambit of the green bond portfolio of the bank,” SBI has said in the RFP.

The lender may have already set up a committee that will decide the eligibility of a project under the green bond framework and for regular monitoring of portfolios. A chief general manager or deputy general manager would be among the members of such a committee.

In the past two years, Axis Bank, IDBI Bank and Yes Bank have sold green bonds.