Bhopal (Madhya Pradesh): Towing the idea of Bhopal Municipal Corporation (BMC) and Indore Municipal Corporation (IMC), the remaining Municipal Corporations of the state could also come up with their bonds to collect money for various development works.
This will help them in pooling extra money for development purpose other than getting money from the state and Centre under different schemes. A senior officer from Directorate of Urban Administration and Development Departments said that there are sixteen Municipal Corporations in the state.
Of them, Indore Municipal Corporation and Bhopal Municipal Corporation have come up with their bonds long ago. Now the remaining Municipal Corporations may also come up with their bonds based on their credit rate.
The bonds are akin to shares of companies hence various criteria of SEBI shall be fulfilled before coming up with any such bond.
BMC planning bond of Rs 400 cr plus
As far as Bhopal Municipal Corporation (BMC) is concerned, it was in 2018 that it had issued bonds of Rs 175 crore under Amrit 1 scheme. The bond money was used under sewage and water-related projects. Now it is again pondering to issue bond of around Rs 400 crore to Rs 500 crore under Amrit 2 scheme. A BMC officer said that companies registered with SEBI usually buy bonds.
What is Municipal Bond
Municipal Bond is a type of debt security issued to pay for capital expenditures including construction works, schools, bridges etc. Municipal Bonds act like Loans, with bondholders becoming creditors. In exchange for borrowed capital, bond holders and investors are promised interest on their principal balance. Municipal Bonds are often exempt from most taxes.
‘Those Municipal Corporations like Indore who have good credit ratings from SEBI approved agencies can issue their Municipal Bond. For remaining Municipal Corporations which are yet to get such ratings, Madhya Pradesh Urban Development Company (MPUDC) will try to issue bonds on their behalf for projects which need funding,’
-Parikshit Zade, Additional commissioner, Urban Administration Development Department (UADD)
