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Issuers who have listed/propose to list municipal debt securities

By - King Stubb & Kasiva on December 20, 2022

On November 24, 2022, The Securities and Exchange Board of India (SEBI) has stated in its circular regarding green debt securities and its offering as a municipal debt security that for the purposes of the SEBI (Issue and Listing of Municipal Debt Securities) Regulations, 2015 [ILMDS], the green debt securities would also be a permissible security.

Since the ILMDS itself does not define green debt securities:

• The definition of green debt securities shall be as per the NCS Regulations which has been explained the subsequent paragraphs.

• In addition, the issuer must follow the guidelines for green debt securities set forth in Chapter IX of the operational circular from August 10, 2021.

The result of the notification was that, anissuer under the ILMDS Regulations may issue a green debt security if itfalls within the definition of “green debt security as per Regulation 2(1)(q) of the NCS regulations), which states that- "green debt security" means a debt security issued for raising funds that are to be used for project(s) and/or asset(s) falling under any of the following categories, subject to the conditions as may be specified by the Board and can include-

• Wind, solar, bioenergy, and other clean energy sources are examples of renewable and sustainable energy.

• Environmentally friendly transportation, such as public transit,

• Sustainable water management, such as recycling water and/or providing clean water for drinking.

• Adaptation to climate change,

• Energy efficiency, including green and efficient construction,

• Effective waste disposal, including recycling and waste-to-energy technologies

• Sustainable land use, including afforestation, sustainable agriculture, and forestry

• Preservation of the biodiversity, or

• a category that the Board may specify from time to time.


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