If the government has its way, Life Insurance Corporation of India (LIC) and sovereign pension fund will be mandated to invest 1 per cent of their assets under management in bonds issued by power lending firms to finance green projects, reported Reuters.
The Power Ministry has written to the Finance Ministry asking that LIC and the Employees’ Provident Fund Organisation (EPFO) be mandated to invest in such bonds issued by the Power Finance Corporation (PFC), REC Ltd and the Indian Renewable Energy Development Agency (IREDA), according to two government officials.
LIC and the EPFO have combined assets under management of ₹50 lakh crore. A commitment of billions of dollars in bonds by these two would play an instrumental role in filling an estimated $3trillion investment gap in meeting a 2070 goal for net zero emissions.
“The government is working on a proposal seeking investment of 1 per cent of the market value of assets managed by LIC and the EPFO in the bonds that would be raised to fund green projects,” one of the officials said.
The ministry of finance was exploring steps to push climate financing, a third government official.
The proposal, if approved, may have to go through the investment committees of both LIC and the EPFO, one of the officials said.
“If the government is proposing to mandate investment in bonds issued by the PFC and REC, it can propose the same to LIC and its investment committee,” said Harvinder Singh, a partner at DSK Legal.