MUMBAI: State Bank of India (SBI) would sell its first series of green bonds to raise about $500-750 million, demonstrating its commitment to sustainable and climate-friendly projects in a country that must accelerate broader economic growth to haul its marginal population out of the poverty sinkhole. The green bond sale, likely in two tranches, could open for subscription within the next few days, three people aware of the sale told ET.

The banking behemoth, which is India’s biggest lender, has appointed seven investment bankers to raise the cash for funding green energy projects that do not emit toxic elements. Investment bankers for the sale include Credit Agricole, SBI Cap, Citi, Bank of America, and Standard Chartered Bank. “As it is SBI’s maiden sale, the duration may be relatively shorter - anything between three and seven years.

The final decision will be taken after investor meetings,” said a person aware of the plans. An email sent to SBI remained unanswered until the publication of this report. "We have to do what I call ‘safe lending’; but at the same time, we have to ensure that the flow of credit to meet the requirements of industry remains uninterrupted,” SBI Chairman Rajnish Kumar told ET last week. Globally, green bonds have become popular, with sustainability emerging as the key metric in deciding both financing commitments and fates of several development projects.

Proceeds from green bonds are set aside for projects that are deemed to be environment friendly.

Offerings of green bonds hit a record $155 billion in 2017, according to an analysis by Bloomberg Intelligence. Bankers are currently in discussion to obtain commitments from global investors whom they would meet this week, sources said.

The issue could be priced within this week. The bonds may be priced either at fixed rate or at floating rate.

If it is fixed at a floating rate, the issuer will offer a spread or mark-up over the US dollar-based LIBOR, said one of the persons cited above. Normally, green bonds offer lower rate rates compared to normal dollar-denominated bonds sold by Indian companies. About nine months ago, SBI had internally approved a $3-billion mega fund-raising plan through the green bond route.

It also obtained the approval from a global adjudicating authority on green bonds, ET reported on September 4 last year. The bank is now compliant with global standards as prescribed by the Climate Bonds Initiative, an international investor-focused charity.

The non-government, non-profit ensures compliance standards for green bond funds, and is working solely on mobilising the $100-trillion debt market for climate change solutions. Globally, green bonds are gaining momentum with many countries selling such debt papers. Credit Agricole, one of the bankers to SBI, has supported two such sovereign sales from France and Belgium in the past one and a half years as advisor.

Citi and Standard Chartered Bank have also played leading roles globally in this space.