Lucknow Municipal Corporation has now become the ninth city to issue a Municipal Bond. These bonds have also been listed on the Bombay Stock Exchange. Municipal corporation bonds are bonds issued by urban locale bodies to raise funds for special projects.
Lucknow. Lucknow Municipal Corporation has become the first Municipal Corporation to issue a bond in Uttar Pradesh. The corporation has launched 200 crore bonds. After the success of the Municipal Corporation in the bid made by investors in Mumbai, the Lucknow Bond has been listed on the Bombay Stock Exchange (BSE). Lucknow has become the ninth city in the country to do so. After the listing of Lucknow, the total bond price has gone up to 3,600 crores. Ministry of Housing and Urban Affairs Secretary Shankar Mishra said that now Ghaziabad of Uttar Pradesh will jointly issue bonds with Varanasi, Agra and Kanupar. Let’s know about those 8 cities that issue bonds.
Apart from Lucknow, these other 8 municipal corporations
Eight cities across the country are Amravati (2000 crores), Visakhapatnam (80 crores), Ahmedabad (200 crores), Surat (200 crores), Bhopal (175 crores), Indore (140 crores) Pune (495 crores). ) And Hyderabad (200 crores). According to the BSE, 3,175 crore bonds have been raised from the BSE bond platform in which the market share is 86 per cent. Let us know that in January 1998, the Ahmedabad Municipal Corporation had issued the first bond for projects for 100 crores without the guarantee of the state government.
Municipal corporation bonds are bonds issued by urban locale bodies to raise funds for special projects. According to SEBI (2015) rule, two conditions have to be fulfilled for issuing bonds. First, there should not be a negative net worth of the Municipal Corporation in the last three fiscal years. Secondly, municipal corporations have not defaulted in repaying any loan in the last one year.
Why municipal finance is required
This is needed to fund many public projects including the state’s infrastructure, schools and housing development. It is necessary for cities to maintain water, sanitation, garbage and sewerage, urban transport, road lights, roads. Some corporations are also now finding new ways of public participation to raise funds and develop the city’s infrastructure. According to a report released by rating agency Crisil in November last year, the US is the largest city corporate bond market.
help for bond smart city projects
Infrastructure demand in the country has increased due to India’s growing economy. According to HPEC report, over a period of 20 years (2012-2031), the estimated investment for urban infrastructure is Rs 39.2 lakh crore. For this, even the government budget and public sector companies cannot fulfill this need. Therefore, municipal bonds are the only ones capable of meeting the need for large-scale investment in the urban infrastructure sector.
Other sources of raising money other than bonds?
Apart from municipal bonds, Value Capture Financing (VCF) is also a support for raising funds for smart city projects. Many state and local governments are in search of this fund organization and many are also connected to it.
tax incentives for investors
The market for municipal bonds in India has not developed significantly, but municipal bonds prove to be helpful in raising funds for the long term, which are important for building important projects such as roads, bridges at affordable costs. Piyush Gupta, managing director of Capital Markets and Investment Services, India at Collier International, said municipal bonds are not increasing due to lack of money and transparency, poor systems and negligence in processes. For this, in recent times, the Center and various governments have taken steps like tax incentives for investors, allowing small size capital to be increased for private placement.