MCG to issue Rs 200cr bonds to raise funds for projects
TNN | Feb 10, 2019, 01:39 IST
The decision to issue bonds was proposed at the MCG meeting held in November 2018.GURUGRAM: MCG will issue municipal bonds from the next financial year to mop up money for the city’s infrastructure projects. Officials said the civic body has already started the process of listing itself on the National Stock Exchange and once that’s done, it will issue bonds worth Rs 200 crore.
However, these will not be available to retail investors. Municipal bonds are issued by civic bodies at a fixed interest rate for a period of at least five years for raising funds for a project or general infra development.
While municipal bonds aren’t very popular in the country, they have been in the news in the past couple of years after Indore, Pune and Hyderabad released the same. Officials said since they do not have expertise on financial markets, a consultant has been hired to help them get started.
“The consultant has been given a deadline of March 31 to finish the process. We are hopeful that we will be able to issue the bonds in the coming fiscal,” YS Gupta, additional municipal commissioner, told TOI. However, given that the corporation has not yet floated the tenders for the project, the deadline might be a little too ambitious. The decision to issue municipal bonds was proposed at the MCG house meeting held in November 2018.
The agenda was passed by the house by a majority vote. While it seems to be a new initiative by MCG to funds its development projects, it is bit odd given that it is one of the richest civic bodies in the country and has never been successful at fully utilising its budget funds.
The corporation has spent only Rs 467 crore of the 1,884 crore budget for 2018-19, which is a mere 25%.
The concept of municipal bonds is not very popular in India, unlike the US where most urban local bodies issue these instruments.
Last year, Indore became the first Indian city to list its municipal bonds on the NSE. Indore managed to raise Rs 215 crore for developing urban clusters. Two other cities — Pune and Hyderabad — have also listed their municipal bonds on the Bombay Stock Exchange.
However, these will not be available to retail investors. Municipal bonds are issued by civic bodies at a fixed interest rate for a period of at least five years for raising funds for a project or general infra development.
While municipal bonds aren’t very popular in the country, they have been in the news in the past couple of years after Indore, Pune and Hyderabad released the same. Officials said since they do not have expertise on financial markets, a consultant has been hired to help them get started.
“The consultant has been given a deadline of March 31 to finish the process. We are hopeful that we will be able to issue the bonds in the coming fiscal,” YS Gupta, additional municipal commissioner, told TOI. However, given that the corporation has not yet floated the tenders for the project, the deadline might be a little too ambitious. The decision to issue municipal bonds was proposed at the MCG house meeting held in November 2018.
The agenda was passed by the house by a majority vote. While it seems to be a new initiative by MCG to funds its development projects, it is bit odd given that it is one of the richest civic bodies in the country and has never been successful at fully utilising its budget funds.
The corporation has spent only Rs 467 crore of the 1,884 crore budget for 2018-19, which is a mere 25%.
The concept of municipal bonds is not very popular in India, unlike the US where most urban local bodies issue these instruments.
Last year, Indore became the first Indian city to list its municipal bonds on the NSE. Indore managed to raise Rs 215 crore for developing urban clusters. Two other cities — Pune and Hyderabad — have also listed their municipal bonds on the Bombay Stock Exchange.
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