What is the News ?

The National Bank for Agriculture and Rural Development (NABARD) has just released its first-ever social bonds, amounting to a total of Rs 1,040.50 crore.

Facts About:

• Social bonds, or social impact bonds (SIBs), are a type of bond used to raise funds for projects with positive social outcomes.
• These projects tackle various societal issues like healthcare, education, affordable housing, poverty reduction, and environmental sustainability.

Notable Example in India:

• In 2020, the Pimpri Chinchwad Municipal Corporation (PCMC) in Pune, Maharashtra, partnered with the United Nations Development Programme (UNDP) to create India's first Social Impact Bond (SIB).

Key Features of NABARD's Social Bonds:

• NABARD's social bonds are the first externally certified AAA-rated Indian Rupee-denominated SIBs. They have received 'AAA' ratings from CRISIL and ICRA.
• The initial bond size was ?1,000 crore, with the option to accept oversubscriptions up to ?2,000 crore, totaling up to ?3,000 crore.
• Each bond has a face value of ?1 lakh.
• Maturity period: 5 years
• Coupon Rate: 7.63 percent

Sustainability Bond Framework:     

• NABARD has introduced a Sustainability Bond Framework to finance and refinance green and social projects.
• Eligible social projects include basic infrastructure, essential services, affordable housing, job creation, food security, socioeconomic advancement, and empowerment.
• Projects focused on energy efficiency, such as green buildings, energy storage, and smart grids, are also eligible for funding through these bonds.