Nepal Infrastructure Bank (NIFRA) has received approval from the Securities Board of Nepal (SEBON) to issue green bonds worth Rs 5 billion, marking the country’s first-ever issuance of such an instrument. SEBON granted the approval on Tuesday for a seven-year bond named NIFRA Green Bond 088/89, which will carry a 6 percent annual interest rate.

Of the total Rs 5 billion issue, Rs 2 billion will be offered to the general public, while the remaining Rs 3 billion will be raised through private placement to institutional investors.

NIFRA has also secured clearance from Nepal Rastra Bank to issue the bond. NIMB Ace Capital Limited will serve as the issue and sales manager.

Green bonds are used to raise funds for projects with environmental and climate-related benefits. According to SEBON, proceeds from this bond will support eco-friendly infrastructure and contribute to Nepal’s sustainable development efforts.

“This issuance will have a positive impact on the economy and help the government achieve its sustainable development goals,” said SEBON spokesperson Niranjaya Ghimire. He added that the move also strengthens Nepal’s capital market by introducing innovative financial instruments.

SEBON paved the way for green bond issuance through the seventh amendment to the Securities Registration and Issuance Regulations. The board’s policy for the current fiscal year includes legal reforms to support the issuance and trading of green bonds, energy bonds, and similar financial tools.

As Nepal’s bond market expands, green bonds are expected to bring diversification, said Murahari Parajuli, Information Officer at the Nepal Stock Exchange (NEPSE). He noted that NIFRA’s green bond, offering a 6 percent return, could attract investors as it exceeds the average interest rate currently provided by commercial banks. At present, bonds from 74 companies are listed and traded on NEPSE.

Merchant bankers also see strong potential for green bonds in Nepal. A banker, speaking on condition of anonymity, said such bonds could channel funds into hydropower, renewable energy, sustainable transport, and water resource conservation. The banker emphasized that SEBON should not only facilitate such issuances but also ensure transparency and accountability in how the funds are deployed.

What Is a Green Bond?

A green bond is a type of fixed-income instrument issued to finance environmentally beneficial projects such as renewable energy, clean transportation, and conservation efforts. These bonds are part of broader financial strategies to support climate resilience and sustainable development.

The European Investment Bank issued the first green bond in 2007, followed by similar issuances by the World Bank in 2008 and the Japan Development Bank in 2014.

According to SEBON, this will be the first green bond ever issued in Nepal.