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India Today
4 days ago
- Business
- India Today
How India is sprinting to build a climate-ready financial architecture
As India races towards its twin ambitions—becoming a $40 trillion economy by 2047 and achieving net-zero emissions by 2070—it faces a formidable challenge: financing its energy task is immense. Estimates suggest that to meet its 2030 green targets alone, India must mobilise $170 billion annually, almost three times the current levels of investment in renewable energy, electric mobility, green hydrogen and industrial the next four decades, that number could swell past $10 trillion. For a country where climate finance is still nascent, the numbers are sobering. But instead of viewing this as a constraint, policymakers are treating it as a design problem—one that needs a structural government is now working on a twin-track approach to fix the climate capital bottleneck. The first involves building an institutional spine for green finance by transforming the National Bank for Financing Infrastructure and Development (NaBFID) into a strategic enabler of climate-aligned projects. The second track aims at unlocking India's capital markets, tapping into the vast, growing pools of domestic savings and enabling public participation in the energy transition through reforms, instruments and investor the heart of the institutional push is a quiet but ambitious plan: the creation of a green-focused subsidiary under NaBFID. A team within NITI Aayog, working closely with the ministry of finance, has studied international models—from Brazil's BNDES (Brazilian Development Bank) to the UK's Green Investment Bank and Canada's Clean Growth discussion initially focused on exploring setting up a new green bank—a dedicated development finance institution (DFI)—to suffice the needs, along with tweaking the norms of priority sector lending for the scheduled banks. Most believe that setting up a new institute would take a lot of sweat and bureaucratic idea taking shape is that of a capital-light, flexible entity housed within NaBFID that can catalyse investments across a spectrum of green sectors: renewable energy, EV charging, storage, biofuels, clean manufacturing and the NaBFID Act already provides for such a subsidiary structure and even permits overseas operations. Financially, NaBFID is in a strong position, with Rs 20,000 crore in equity capital, another Rs 5,000 crore in grants, and a growing loan book of over Rs 50,000 crore. Officials working on the plan suggest that an additional Rs 10,000 crore infusion—well within the sovereign's capacity—could unlock lending capacity of over Rs 1.5 trillion over the most intriguing part of the proposal lies in its geography. The proposal is that the new green subsidiary may be headquartered in GIFT City, Gujarat's international financial hub. The location offers strategic advantages. Since GIFT City falls outside the jurisdiction of the Reserve Bank of India (RBI) and is regulated by the International Financial Services Centres Authority (IFSCA), it provides greater flexibility in structuring instruments, raising global capital, and issuing green bonds not limited by India's sovereign theory, this could sharply reduce the cost of capital for high-risk green projects and attract global pension and sovereign wealth funds looking for investable opportunities in emerging not everyone is convinced. Critics of the NaBFID-centric approach argue that the institution, while well-capitalised, may not yet have the bandwidth or sectoral expertise required to navigate the highly technical, fast-evolving landscape of cleantech. Unlike traditional infrastructure such as roads, ports, or transmission lines—where risks are better understood and returns more predictable—green industries operate under very different risk rapid pace of technological change, regulatory uncertainty and relatively short track records of most climate start-ups make them less compatible with conventional infrastructure lending frameworks. Without dedicated talent, bespoke underwriting models, and a deeper appreciation of innovation risk, there is a real danger that the green arm of NaBFID could become a box-checking exercise rather than a transformative institutions alone cannot solve the climate finance equation. India's broader capital markets remain underpowered when it comes to channelling savings into green growth. Consider this: despite over 225 million retail demat accounts—six times the number a decade ago—equity investment in cleantech remains marginal. Only about 4 per cent of India's clean energy finance comes from equity markets, compared to 35 per cent in developed joint study by the New Delhi-based think-tank Council for International Economic Understanding (CIEU) and Dalberg Advisors to develop the Bharat Climate Forum platform highlighted structural barriers: cleantech companies are underrepresented on SME (small and medium enterprise) and main boards; high-profitability thresholds block early-stage firms from listing; and the absence of sectoral indices keeps green companies largely invisible to institutional and retail the sovereign's green bond programme, launched with fanfare, is struggling. The last issuance in 2025 saw just 30 per cent investor uptake, largely because of the lack of incentives or a 'greenium'. Without meaningful tax benefits, institutional mandates or strong post-issuance impact reporting, investors remain on the missing is clarity. Both banks and investors say they lack confidence in identifying what qualifies as 'green' or 'transition-aligned' finance. To address this, the finance ministry, led by Nirmala Sitharaman, launched a public consultation in April 2025 to develop a formal green taxonomy for India—a definitional framework that classifies economic activities by their environmental finalised, this taxonomy will be crucial in standardising disclosures, verifying the greenness of bonds and loans, and aligning the financial sector with global norms like the EU Taxonomy. Globally, thematic indices have catalysed passive investment, green ETF creation, and public awareness. The FTSE Environmental Opportunities Index, China's CSI New Energy Index, and Canada's S&P Renewable Energy Index have outperformed mainstream indices and boosted green investment flows. India must build its own. More importantly, it will help rebuild trust in the integrity of green instruments and reduce fears of lack of transparency is not the only hurdle. India's green finance ecosystem suffers from a problem of discoverability. There is no publicly available benchmark index for the country's energy transition firms. Globally, countries have launched green indices and ETFs to signal investor confidence and drive capital CSI New Energy Index, the FTSE Environmental Opportunities Index, and Canada's S&P Renewable Energy Index have seen massive inflows and consistent outperformance. In India, despite evidence that cleantech SMEs outperform broader SME IPO indices, they remain under-tracked and underfunded. Creating such indices could trigger a virtuous cycle, enabling ETFs, improving firm visibility, and incentivising regulators have begun to respond, the process remains fragmented. The RBI's green deposit framework—intended to guide banks in mobilising climate-aligned retail funds—has seen limited traction, again due to definitional ambiguities and unclear auditing standards. The IFSCA is developing a Transition Bond Framework aimed at hard-to-abate sectors like steel, cement, and chemicals, but it too will require alignment with national taxonomy, rating agencies and broader question is whether India can build a cohesive architecture in time to meet its targets. The urgency is undeniable. As climate risks intensify and fossil-fuel investments lose viability, India must redirect vast pools of capital into green sectors not just to meet environmental goals, but to safeguard long-term macroeconomic stability. A well-functioning climate finance system would not only drive the transition—it would also deepen India's capital markets, broaden retail participation and reduce dependence on foreign currency is no shortage of vision. From the corridors of North Block to the trading floors of GIFT City, the outlines of a new financial order are emerging—one that places climate risk at the centre of economic planning. But architecture alone is not enough. Execution will require political clarity, regulatory agility, institutional coherence—and above all, the right people with the right expertise. India's vault is ready. Whether we can fill it with the right kind of capital is the real to India Today MagazineMust Watch
Time of India
13-05-2025
- Business
- Time of India
India bond yields seen lower as India-Pakistan ceasefire calms jitters
Indian government bond yields are likely to decrease in early trading. This follows India and Pakistan agreeing to a ceasefire. Traders are expected to resume buying. Indian government bond yields are likely to decrease in early trading. This follows India and Pakistan agreeing to a ceasefire. Traders are expected to resume buying. Investor confidence in Indian markets has improved. The focus will be on India's April inflation data and state debt supply. Overnight index swap rates are also expected to fall. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Popular in Markets 1. Will NaBFID successfully navigate offshore bond market? RATES Tired of too many ads? Remove Ads Indian government bond yields are expected to dip in early deals on Tuesday, as traders are likely to resume buying after India and Pakistan agreed on a benchmark 10-year yield will likely open 3-4 basis points (bps) lower, a trader at a foreign bank said, after closing at 6.3750% in the previous and money markets were shut on Monday due to a local holiday."The overhang of the conflict is over, so traders with lighter books will start buying," a trader at a primary dealership and Pakistan agreed on a full and immediate ceasefire over the weekend, which bolstered investor confidence in Indian Minister Narendra Modi's first public address since the Indian armed forces launched strikes on Pakistani terrorist camps also calmed nerves."The 10-year yield can test 6.32% during the day, but the direction of the yield will depend on whether PSU banks offload their stock," the trader banks bought bonds worth 90.6 billion rupees ($1.07 billion) last focus will now be on India's April inflation data and state debt supply , both due later in the day. Economists polled by Reuters expect the key price gauge to have declined to a near six-year low of 3.27%.If inflation is below market expectations, bonds could rally further, traders states are due to sell bonds worth 115 billion overnight index swap rates are likely to extend their fall as sentiment improved on the ceasefire, and government bond buying is expected to resume. Any major moves will depend on further cues on rate cuts, traders rates fell 2-3 basis points in the previous one-year OIS rate was at 5.63%, while the two-year OIS rate was at 5.53%, and the most liquid five-year OIS rate was at 5.65%.KEY INDICATORS: ** Brent crude futures LCOc1 down 0.35% to $64.73 per barrel, after rising 1.64% in previous session ** Ten-year U.S. Treasury yield US10YT=RR at 4.4531%; two-year yield US2YT=RR at 3.9893% ** The RBI to conduct one-day variable rate repo auction for 250 billion rupees ($1 = 84.8570 Indian rupees).
Time of India
13-05-2025
- Business
- Time of India
Foreign banks dump $3 billion worth g-secs amid India-Pak tensions
Mumbai: Foreign banks and primary dealers dumped nearly $3 billion worth of Indian government securities over Thursday and Friday amid escalating India-Pakistan tensions . But traders expect them to return as geopolitical risks showed signs of cooling over the weekend, likely lowering yields by 4-5 basis points Tuesday. Traders believe the 10-year benchmark is likely to settle near 6.32-6.34%, following the recent border de-escalation and ceasefire announcement. They said the sudden selling last week was driven by concerns of a wider military conflict after cross-border strikes intensified, triggering a rush to pare exposure to risk assets. The 10-year benchmark yield had spiked nearly 10-12 basis points recently. Bonds Corner Powered By Foreign banks dump $3 billion worth g-secs amid India-Pak tensions Traders believe the 10-year benchmark is likely to settle near 6.32-6.34%, following the recent border de-escalation and ceasefire announcement. Is a US recession imminent and what would be the impact on India? How should we manage a robust portfolio in this scenario? Will NaBFID successfully navigate offshore bond market? Indian bond yields snap 7-week falling streak due to border conflict Indian bond yields climb as traders panic sell on widening border conflict Browse all Bonds News with While there was sharp movement in G-sec yield last week, it was not primarily due to foreign investors pulling out and trader positioning in response to geopolitical uncertainty only but also responding to the US yield movement. This has caused a pullback in yields from the recent highs around 6.44% toward the previous consolidation zone 6.32-6.34%. Live Events Global cues, especially US Treasury yields rising 70-80 basis points over a few days, are also influencing India's fixed income market. "The 10-year yield may cool off temporarily to the 6.32-6.34% levels due to the ceasefire and position unwinding, but that's just a knee-jerk move," said Ashhish Vaidya, managing director & head - Treasury & Markets, DBS Bank India. "The broader short term tone remains cautious, with upward pressure persisting unless global yields, especially in the US, begin to ease meaningfully, which will likely set the trend for making the Em debt more attractive." Yields on 10-year G-sec, which was at 6.3% on 23 April has risen 6.44% at the end of last week. In the longer term, if RBI cuts the repo rate to 5.50%, experts say, yields could fall to 6%, offering investors who entered at 6.40%-6.44% a potential gain and additional returns, higher than earlier estimates. "There have been de-escalations on the border and a cease fire, so I do expect bond yields to soften by about 4 basis points on Tuesday and I am expecting yields to close at about 6.33%," said Mataprasad Pandey, vice president, Arete Capital Services. "I had given an investment call on Thursday when yields went up to 6.44% to 'buy.' In the longer term, Pandey said that assuming RBI cuts rates to a terminal repo of 5.50%, yields will likely fall to 6%. In such a scenario, investors who bought when yields were at 6.40-6.44% would see more capital appreciation.
Time of India
12-05-2025
- Business
- Time of India
Will NaBFID successfully navigate offshore bond market?
Mumbai: The National Bank for Financing Infrastructure and Development ( NaBFID ) held non-deal investor meetings in Hong Kong last week as part of preparations for its first offshore bond issue, people familiar with the matter said. Citibank was coordinating the meetings, which aimed to gauge investor appetite ahead of a potential dollar bond sale, they said. The deal size, if pursued, will hinge on market conditions and the effective cost. A Citibank spokesperson declined to comment where NaBFID did not respond to request for comment. "The international rating process is currently underway, and the deal size will depend on market conditions and the landed cost in INR terms after hedging," a person privy to the development said. Since, NaBFID is a first-time issuer, the bond when priced could be 100-120 basis points above the US treasury yield, the person added. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Moose Approaches Girl At Bus Stop In Tipaza - Watch What Happens Happy in Shape Undo The last time an Indian public sector entity tapped the dollar bond market was in September 2024, when power sector financier REC raised $500 million at 4.75%. This was purely a non-deal roadshow, one person said. "NaBFID is testing waters and may not immediately raise funds." NaBFID, fully owned by the Indian government, has an authorised capital of ₹1 lakh crore and paid-up equity of ₹20,000 crore. It benefits from a sovereign guarantee on foreign currency borrowings and has received a ₹5,000 crore grant to lower funding costs. Bonds Corner Powered By Will NaBFID successfully navigate offshore bond market? The last time an Indian public sector entity tapped the dollar bond market was in September 2024, when power sector financier REC raised $500 million at 4.75%. This was purely a non-deal roadshow, one person said. "NaBFID is testing waters and may not immediately raise funds Indian bond yields snap 7-week falling streak due to border conflict Indian bond yields climb as traders panic sell on widening border conflict Indian insurers urge regulator's easing of counterparty exposure in new bond forwards market RBI eases FPI rules on corporate bonds to boost foreign inflows Browse all Bonds News with
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Business Standard
01-05-2025
- Business
- Business Standard
NaBFID plans to raise up to ₹70,000 crore in FY26 for development push
National Bank for Financing Infrastructure and Development (NaBFID) is looking to borrow — including through market debt and credit lines — up to ₹70,000 crore in the current financial year (FY26), as against just over ₹23,000 crore raised in FY25, both from international and domestic markets. The current financial year may also see the development finance institution tapping the overseas market for its maiden fundraise through external commercial borrowings (ECBs). Rajkiran Rai G, its managing director, told Business Standard the government-owned financial institution has so far been using domestic sources. 'Now we plan to visit the international market through external
