UNLOCKING SOCIAL IMPACT: THE RISE OF SOCIAL BONDS IN SUSTAINABLE INVESTING

In the context of financial markets, social bonds refer to a specific type of bond issued by governments, municipalities, or organizations to raise capital for projects with social or environmental benefits.

- Piyush Kumar Jha

These bonds are also known as "green bonds" or "sustainability bonds" depending on the focus of the projects they finance.

Social bonds are another new category of bonds making waves in the investment space. Just like green bonds, social bonds are part of the broader sustainable bond market. They aim to fund projects with a direct positive social impact, such as affordable housing, education, healthcare, socioeconomic advancement, and employment generation.

The Pimpri Chinchwad Municipal Corporation (PCMC) in Maharashtra's Pune and United Nations Development Programme (UNDP) in 2020 co-created India's inaugural SIB. The National Bank for Agriculture and Rural Development (NABARD) has issued India's first 'AAA' rated Indian Rupee denominated Social Bonds aggregating Rs. 1,040.50 crore at a coupon rate of 7.63 per cent in the year of 2023. The bonds (redeemable, taxable, non-convertible, non-priority sector, unsecured, social securities of face value Rs. 1 lakh each) of five-years tenure were issued privately to eligible institutional investors.

Key Characteristics of Social Bonds