Daily Current Affairs : 28-December-2023

In a significant financial stride, the National Bank for Agriculture and Rural Development (NABARD) has triumphantly raised Rs 1,040.50 crore through a five-year social bond. This accomplishment underscores NABARD’s commitment to sustainable finance and rural development.

Social Bonds: A Novel Approach:

NABARD’s social bonds, bearing the prestigious ‘AAA’ ratings from CRISIL and ICRA, mark a pioneering move in the financial landscape. These bonds, a form of debt instrument, prioritize social and environmental considerations in their investment strategy.

Listing on the BSE:

The social bonds issued by NABARD will find a home on the Bombay Stock Exchange (BSE), adding an extra layer of transparency and accessibility to investors. This listing not only enhances market visibility but also reflects the credibility of NABARD’s financial instruments.

Sustainability Bond Framework: A Green and Social Commitment:

In a forward-thinking initiative, NABARD recently introduced a Sustainability Bond Framework. This framework is designed to channel funds into both green and social projects, aligning with the global push for sustainable development.

Key Features of the Sustainability Bond Framework:
  • Financing and Refinancing: The framework aims to facilitate financing and refinancing for projects that have a positive impact on the environment and society.
  • Green Projects: Emphasizing ecological sustainability, funds will be directed towards green projects, contributing to environmental conservation and climate action.
  • Social Projects: The framework also focuses on funding social projects, addressing crucial issues like healthcare, education, and poverty alleviation.
Important Points:
  • NABARD’s Financial Success:
    • Raised Rs 1,040.50 crore through a five-year social bond.
    • Highlights NABARD’s commitment to sustainable finance and rural development.
  • Social Bonds: A Milestone Approach:
    • ‘AAA’ ratings from CRISIL and ICRA signify credibility.
    • Social bonds prioritize social and environmental considerations in investments.
  • Listing on the BSE:
    • Social bonds to be listed on the Bombay Stock Exchange (BSE).
    • Enhances market visibility and reflects the credibility of NABARD’s financial instruments.
  • Sustainability Bond Framework: A Forward-Thinking Initiative:
    • Framework introduced for financing and refinancing green and social projects.
    • Aligns with the global push for sustainable development.
  • Key Features of the Sustainability Bond Framework:
    • Financing and Refinancing:
      • Facilitates funding for projects with a positive impact on the environment and society.
    • Green Projects:
      • Directs funds towards environmentally sustainable projects.
    • Social Projects:
      • Focuses on funding projects addressing crucial social issues like healthcare, education, and poverty alleviation.
Why In News

The National Bank for Agriculture and Rural Development (NABARD) has achieved a significant milestone by successfully raising Rs 1,040.50 crore through a five-year social bond, reinforcing its commitment to fostering sustainable development in the agricultural and rural sectors.

MCQs about Social Bonds and the Sustainability Bond Framework

  1. NABARD’s social bonds primarily aim to:
    A. Achieve a credit rating from CRISIL and ICRA
    B. Raise funds for rural development
    C. Promote green projects exclusively
    D. List on the National Stock Exchange (NSE)
    Correct Answer: B. Raise funds for rural development
    Explanation: The social bonds are designed to raise funds for rural development, reflecting NABARD’s commitment to sustainable finance.
  2. What distinguishes NABARD’s social bonds in terms of credibility?
    A. ‘AAA’ ratings from Moody’s
    B. Listing on multiple stock exchanges
    C. Exclusive focus on environmental projects
    D. ‘AAA’ ratings from CRISIL and ICRA
    Correct Answer: D. ‘AAA’ ratings from CRISIL and ICRA
    Explanation: The social bonds have received ‘AAA’ ratings from both CRISIL and ICRA, highlighting their high credibility.
  3. Where will NABARD’s social bonds be listed?
    A. National Stock Exchange (NSE)
    B. New York Stock Exchange (NYSE)
    C. London Stock Exchange (LSE)
    D. Bombay Stock Exchange (BSE)
    Correct Answer: D. Bombay Stock Exchange (BSE)
    Explanation: The social bonds issued by NABARD will be listed on the Bombay Stock Exchange (BSE).
  4. What is the main focus of NABARD’s Sustainability Bond Framework?
    A. Exclusive financing for green projects
    B. Refinancing for existing projects only
    C. Financing and refinancing for green and social projects
    D. Listing bonds on global stock exchanges
    Correct Answer: C. Financing and refinancing for green and social projects
    Explanation: The Sustainability Bond Framework aims to facilitate financing and refinancing for both green and social projects, aligning with sustainable development goals.

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