PM Modi's Varanasi constituency to float municipal bonds of Rs 200 crore

Lucknow Municipal Corporation earlier in December become the first city in North India to list at BSE

Varanasi, Prime Minister Narendra Modi's parliamentary constituency, will issue municipal bonds worth Rs 200 crore to fund infrastructure projects, joining state capital Lucknow in listing on the Bombay Stock Exchange (BSE).

The Varanasi Municipal Corporation (VMC) has added 89 villages to its municipal limits for the stock listing. Its bond will a debt security to finance capital expenditure, giving investors payments on a predetermined rate of interest. 

Varanasi needs funds to develop ghats (riverside), roads, flyover, inland waterways, the Kashi Vishwanath temple, and a convention centre. Nine companies could participate in bid to select a merchant banker for the listing.

 

Apart from Varanasi, the state government is encouraging other municipal corporations including Ghaziabad and Agra to take steps for raising funds through bonds to finance big projects. The government believes municipal bonds provide funds and help build the country’s image among investors.

While municipal bodies with Double-A or Triple-A rating could issue bonds, the current investment rating of VMC is Triple B, which is required to be reformed and converted to Double-A for becoming investment grade. The city would be required to get the bonds rated by at least two rating agencies, such as CRISIL, ICRA, CARE etc.

The Lucknow Municipal Corporation earlier in December become the first city in North India to list bonds worth Rs 200 crore at BSE. Chief Minister Yogi Adityanath had described the listing as ‘the starting of a new era’ in the history of the state.