The Reserve Bank of India on Friday said it will auction sovereign green bonds worth Rs 16,000 crore in two tranches to finance green infrastructure projects that slow carbon emissions.

A sovereign green bond is a debt instrument issued by the Central or state government to borrow money from investors to finance projects that will have a positive impact on climate and environment.

Finance Minister Nirmala Sitharaman had announced the plan to issue green bonds while presenting the Union Budget in February.

On Friday, the Reserve Bank of India said in a statement that it will auction 5-year and 10-year green bonds worth Rs 8,000 crore each on January 25 and February 9.

They will be auctioned using the uniform price method, the statement said, adding that 5% of the notified amount of the sale would be reserved for retail investors under the non-competitive bidding facility.

“The proceeds will be deployed in public sector projects which help in reducing the carbon intensity of the economy,” the central bank said.

Globally, several governments have issued sovereign green bonds in view of the increasing need for financing climate mitigation and adaptation activities.