What Are Social Bonds?

The National Bank for Agriculture and Rural Development (NABARD) issued its first social bond in September 2023, with an issue size of Rs 1,040.50 crore. The bonds were issued at 7.63 per cent coupon rate to eligible institutional investors and later listed on BSE Ltd. These have a five-year holding period with annual coupon payments. The issue was oversubscribed 2.86 times. The funds raised will be used for drinking water projects under the Jal Jeevan Mission in Telangana. CRISIL Ltd and ICRA Ltd rated these bonds ‘AAA’. So, these have negligible risk in terms of default. Let’s find out more about social bonds. What Are Social Bonds? Social bonds are specific types of bonds issued to raise funds for projects likely to have a positive impact on society. That is why they are also called social impact bonds. The way these bonds operate is similar to how traditional...