Social Bonds

The National Bank for Agriculture and Rural Development (NABARD) has issued India’s first ‘AAA’ rated Indian Rupee-denominated Social Bonds.

[ref- bqpriRef: Sourceme]

What are Social bonds?

• Social bonds, also known as social impact bonds (SIB), are the type of bond where the bond issuer is gathering funds for a project that had some socially beneficial implications.
• Similar to any other bond, social bonds imply that the bond issuer owes a debt to the bondholder.

About Social Bonds issued by NABARD:

• The bonds of five-years tenure were issued privately to eligible institutional investors.
• They are redeemable, taxable, non-convertible, non-priority sector, unsecured, and social securities of face value ₹1 lakh each.
• The bonds have been rated AAA rating by Credit Rating Information Services of India Limited (CRISIL) and Investment Information and Credit Rating Agency (ICRA).

Sustainability Bond Framework:

• Development Finance Institution’s (DFI) announced a Sustainability Bond Framework, which seeks to finance and refinance new or existing eligible green and social projects.
• Eligible social projects: Affordable basic infrastructure, access to essential services, affordable housing, employment generation, energy efficiency projects, food security, socioeconomic advancement, and empowerment.

About NABARD:

• NABARD is a Development Bank with a mandate for providing and regulating credit for the development of agriculture, small-scale industries, cottage and village industries, handicrafts and other allied economic activities in rural areas to promote prosperity of rural areas.

Ref: Source