LUCKNOW: Varanasi, the Lok Sabha constituency of Prime Minister Narendra Modi, will become the second city after Lucknow to raise funds through municipal bonds.
A government spokesperson said Varanasi would raise Rs 200 crore through stock exchange which would be used to fund various infrastructure development schemes.
The jurisdiction of Varanasi Municipal Corporation (VMC) was recently increased with the addition of 89 revenue villages.
“The municipal corporation has started ground work to execute the plan. To issue the bonds, a consultant firm or merchant banker will be selected through a tender process. As per the guidelines of the department of municipal development, Government of India, nine companies can participate in the process. The companies include AK Capital Services Limited, Axis Bank Ltd, Darashaw & Company Pvt Ltd, ICICI Bank Ltd, ICRA Management Consulting Services Ltd, SBI Capital Market Ltd, Spa Capital Advisor Ltd, SREI Infrastructure Finance Ltd and Yes Bank Ltd,” said municipal commissioner Gaurang Rathi.
Chief accounts officer, VMC, Manoj Tripathi said, “Municipal bodies need ‘AA’ or ‘AAA’ rating to be able to issue bonds but current investment rating of Varanasi Municipal Corporation is ‘BBB’. This needs to be improved and converted into ‘AA’ for investment.”
He added that before launching the bond, the corporation would be rated by an independent financial agency which would confirm its international standards.
A committee under the chairmanship of additional commissioner has been constituted for bond-related proceedings.
“Municipal bond is an instrument to raise funds. Under this, a bond issuing institution borrows money from the market for a fixed time and guarantees return of the principal amount along with interest. With the issuance of the bond, VMC will also have a better public image and will be able to raise funds from across the world,” an official said.
“Funds will boost growth in various sectors. Currently, among major works being undertaken by VMC include development of ghats, ring roads, Sri Kashi Vishwanath Dham, Khirkiya Ghat, Rudraksha Convention Centre, flyover, CNG trains, CNG boats in the Ganga, Inland Waterways, connectivity and promotion of tourism,” the official said.
LMC bonds were listed at the Bombay Stock Exchange (BSE) on December 1, making it the first city in north India to raise funds in this manner. The Rs 200-crore bond was oversubscribed by 4.5 times when it was launched on November 13.
Other cities in UP that will follow suit include Ghaziabad, Agra and Kanpur.