Indore receives Rs 7.2 bn green bonds to develop largest solar plant

Green bonds are debt securities that are issued by a governmental or private organisation to finance or refinance environmental projects. The first green municipal bond in India was issued by Ghaziabad Nagar Nigam (GNN), a civic organisation in Uttar Pradesh, for the construction of a tertiary water treatment facility. According to IMC Commissioner, Pratibha Pal, “The solar power project will be funded, but more importantly, this will pave the way for other such (green) projects and explore creative financing strategies to support them.”

When Indore became the first city to sell municipal bonds on the National Stock Exchange's (NSE) debt securities platform in 2018, the civic body hoped expecting a 10 to 15 times oversubscription of its bonds as opposed to the 1.26 times oversubscription that was observed. When there is more demand for new stock than there are shares actually available, the situation is referred to as oversubscription.

The green bond received bids of Rs 6.62 billion on the first day, and it was 5.42 times oversubscribed. “There are several reasons for such an overwhelming response, including the urban local bodies for the first time in India issuing green bonds and the type of project we are opting for. Now, a solar power plant is going to help the corporation reduce its recurring expenditure. But most important is the timing. The opening for the issue was just after the budget, and in it, municipal bonds were given huge importance,” said Pratibha Pal.