RBI permits FPIs to invest in sovereign green bonds via IFSC

In FY24, only foreign portfolio investors (FPIs) registered with SEBI were eligible to participate in sovereign green bond (SGrB) issuances. However, to increase the investor base, RBI has permitted FPIs operating within the GIFT City-based International Financial Services Center to invest in SGrBs. This increase in the potential pool of investors will be crucial during FY25, as the government plans to borrow another INR 12,000 crore through SGrB issuances in the first half of the year.

Will the new pool of capital lead to an increase in the greenium over what has been discovered from previous SGrB issuances? 

Further, will this new investor base prompt an increase in the scale of sovereign green bond issuances themselves?