SOCIAL BONDS

Why in News?

The National Bank for Agriculture and Rural Development (Nabard) said it has issued India’s first ‘AAA’ rated Indian Rupee denominated Social Bonds aggregating ₹1,040.50 crore at a coupon rate of 7.63 per cent. This marks the first externally certified AAA-rated Indian Rupee social bonds in the country. The bonds (redeemable, taxable, non-convertible, non-priority sector, unsecured, social securities of face value ₹1 lakh each) of five-years tenure were issued privately to eligible institutional investors on September 26, as per the Development Finance Institution’s (DFI) statement.

What are Social Bonds?

• It is also known as social impact bonds (SIB), the bond issuer raises funds for a project that has some socially beneficial implications.
• SBF seeks to finance and refinance new or existing eligible green and social projects.
• Eligible social projects include affordable basic infrastructure, access to essential services, affordable housing, employment generation, food security, socioeconomic advancement, and empowerment.
• Projects that promise energy efficiency, including green buildings, energy storage, and smart grids, would also be  eligible.
• AAA: The instrument with AAA rating is considered to have the highest degree of safety in respect of timely servicing of financial obligations.