Yes Bank

YES BANK is helping green finance to grow in India

The Indian government has announced that it will add 175 GW of renewable energy capacity by 2022. [1] That’s a huge target, but one that reflects their need to act fast. Rapid economic expansion means there’s a risk of dangerous growth in carbon emissions.

Hitting that target will take a massive investment of capital and the government has taken the step of targeting private investment. Traditionally, the Indian investment system has been biased against financing through debt and foreign investors are wary of India’s volatile currency. The country needs a low-risk, low-cost option to raise the money needed to finance green projects. Green Bonds could be the answer. [2]

Green Bonds, or Climate Bonds, can be issued by governments or corporations, with the proceeds earmarked specifically for projects that fight climate change. [3] YES BANK, India’s fifth-largest private sector bank, has a history of socially and environmentally responsible investment, and is leading the way. [4]

India’s first Green Infrastructure Bond

On February 16, 2015, YES BANK issued India’s first ever Green Infrastructure Bond. They aimed to raise $80 million—rising to a potential $160 million depending on demand—for solar, wind power, biomass and hydroelectric projects. [5]  And, at the first Renewable Energy Global Investors Meet & Expo in February, YES BANK committed to funding 5,000 MW of renewable energy projects, part of which comes from this first bond issue. [6]

A successful launch

In the end, YES BANK’s bond issue raised over US$158 million, doubling the original target. There was big interest from insurance companies, pension providers, foreign portfolio investors and mutual funds. [7] Since then, the International Finance Corporation (the private sector arm of the World Bank) has also said it might invest up to US$100 million to support YES BANK’s plans to lend to renewable energy projects. [8]

Setting the standard in low-carbon finance

Rana Kapoor, managing director and CEO of YES BANK, says the bank’s first-ever Green Bond “is a landmark transaction in green infrastructure financing in India.” [9] YES BANK moved away from the debt-averse investment culture in India and put renewables at the heart of its investment strategy. YES BANK hopes its actions will encourage other companies to follow suit and promote the climate bond market in India.

RESOURCES
[1] http://www.bloomberg.com/news/articles/2015-02-28/india-to-quadruple-renewable-capacity-to-175-gigawatts-by-2022
[2] http://www.climatebonds.net/2015/02/oooh-india-yes-bank-going-india%E2%80%99s-first-green-bond-india%E2%80%99s-amazing-renewables-buzz-minister
[3] http://www.climatebonds.net/market/explaining-green-bonds
[4] http://www.yesbank.in/media-centre/press-releases/fy-2014-15/yes-bank-successfully-issues-india-s-first-green-infrastructure-bond.html
[5] http://www.climatebonds.net/2015/02/oooh-india-yes-bank-going-india%E2%80%99s-first-green-bond-india%E2%80%99s-amazing-renewables-buzz-minister
[6] http://www.yesbank.in/media-centre/press-releases/fy-2014-15/yes-bank-successfully-issues-india-s-first-green-infrastructure-bond.html
[7] http://www.yesbank.in/media-centre/press-releases/fy-2014-15/yes-bank-successfully-issues-india-s-first-green-infrastructure-bond.html
[8] http://www.vccircle.com/news/banking/2015/03/02/ifc-may-back-yes-bank-100m-green-bond-lending-line-women-owned-smes
[9] http://www.yesbank.in/media-centre/press-releases/fy-2014-15/yes-bank-successfully-issues-india-s-first-green-infrastructure-bond.html

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