YES Bank, India's 4th largest Private Sector Bank has announced that it will raise Rs 5 billion plus greeshoe via issue of India's first ever Green Infrastructure Bonds. The bonds are for a tenor of 10 years.

The amount raised will be used by YES BANK to finance Green Infrastructure Projects in Renewable Energy and Energy Efficiency Projects including Solar Power, Wind Power, Biomass, and Small Hydel Projects. KPMG in India will be providing the Assurance Services annually, on the use of proceeds in line with the Green Bond principles.

At the 1st Renewable Energy Global Investors Meet & Expo hosted by the Ministry of New and Renewable Energy, Govt. of India, YES BANK was the first Bank to have made a commitment of funding 5000 MW of Renewable Energy projects and the funds will be utilized towards meeting this commitment. YES BANK has also made a commitment of funding Clean Energy projects at the United Nations Climate Change Summit 2014.

Rana Kapoor, managing director & CEO, YES BANK said, ''The launch of India’s first ever Green Infrastructure Bonds reinforces YES BANK’s Responsible Banking ethos and further cements our status as a pioneer in Green Energy financing in India.''

The bond issue comes on the back of a record USD 1.2 billion capital raised by YES BANK in 2014-15 through multiple transactions including a USD 500 million funding in May 2014, USD 422 million Syndicated Loan in October 2014 and USD 200 million Loan from Asian Development Bank in December 2014. In January 2015, YES BANK also signed an MoU of USD 220 million with OPIC, the US Government’s Development Finance Institution and Wells Fargo to explore financing to MSMEs.

Given the Govt. of India's focus on India’s Renewable Energy Potential and target of 175 GW of additional capacity installation by 2022, it is estimated that the renewable energy sector will require significant financing. Currently, there are a number of challenges in the existing financing mechanisms including sector limits, high interest rates and Asset-Liability mismatch, and therefore there is a need to evolve innovative financing mechanisms to aid projects in the renewable energy and energy efficiency space. Green Infrastructure Bonds are one such avenue to allow for financing to flow to vital green energy projects.

Globally, Green Bonds issues amounted to almost $35 billion worldwide in 2014 while the market in India is still nascent/non-existent.  The first such green (infrastructure) bond issuance in India by YES Bank will catalyse the market for green infrastructure bonds in India and allow responsible investors to facilitate funding towards Renewable and Clean Energy projects.

Shares of the bank declined Rs 13.35, or 1.6%, to trade at Rs 821.80. The total volume of shares traded was 171,969 at the BSE (1.19 p.m., Monday).