Context: The Pension Fund Regulatory and Development Authority (PFRDA) will allow pension funds to invest in sovereign green bonds that the government is expected to issue in the second half of the current financial year.
What are Sovereign Green Bonds?
Sovereign Green Bonds are government-issued bonds used to fund projects that have positive environmental impacts and contribute to sustainability goals.
- It was announced in the Union Budget 2022-23 and the framework for SGrBs was issued by the Ministry of Finance in 2022. Investors in these bonds do not bear project-related risks.
Last year, the government raised Rs 16,000 crore from the issuance of Sovereign Green Bonds to fund projects aimed at reducing carbon emissions. Currently, there are 10 pension fund managers under the National Pension System, and the move aims to encourage investment in environmentally friendly projects.
Pension Fund Regulatory and Development Authority (Statutory organization; founded 2003; HQ: New Delhi) is the regulatory body for the overall supervision and regulation of pensions in India. It operates under the jurisdiction of the Ministry of Finance.