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After listing the bonds of Lucknow and Ghaziabad municipal corporations on the Bombay Stock Exchange (BSE),
four other municipal bodies in Uttar Pradesh are gearing up to float the debt market instruments.
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The cities in the pipeline include Varanasi, the parliamentary constituency of Prime Minister Narendra Modi, apart from Kanpur, Agra and Prayagraj (Allahabad).
They are likely to raise about ₹100 crore each through the bonds. The proceeds will be invested in urban development and infrastructure projects, a senior government official said.
A bond is a debt security issued by a government agency or municipality to finance capital expenditure.
The investors receive returns on a predetermined rate of interest over a stipulated period.
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Uttar Pradesh Chief Minister Yogi Adityanath directed the four municipal corporations to float their bonds after Lucknow and Ghaziabad successfully raised Rs 200 crore and ₹150 crore respectively from the capital market through these instruments.
Lucknow and Ghaziabad municipal entities tapped the bond market in the post-pandemic period when the domestic and international financial markets were still weathering the adverse impact.
However, the four municipal bodies failed to process their bonds even after a year.
Recently, the government expressed displeasure with the municipal commissioners for their failure to act despite
an express directive from the CM. Now, a nodal officer has been appointed to facilitate the process.
In November 2020, Lucknow Municipal Corporation (LMC) issued bonds of ₹200 crore, which were oversubscribed
by 250 per cent on its debut at the BSE. The LMC bonds with 10-year tenure offered 8.5 per cent interest.
In March 2021, Ghaziabad Municipal Corporation (GBC) became India’s first municipality to issue green municipal
bonds worth ₹150 crore. GMC mopped up ₹100 crore and ₹50 crore in base issue and green shoe option respectively, totalling ₹150 crore in proceeds.
Apart from municipal corporations, the UP government has also asked the state development authorities to float
infra bonds.
The development authorities of five big cities namely Lucknow, Ghaziabad, Kanpur, Varanasi, and Agra have been
asked for preliminary groundwork, including credit rating.
“We have told the development authorities to get themselves credit rated and explore the bonds market for projects
with good financial base in terms of returns,” UP additional chief secretary, housing, Nitin Ramesh Gokarn, had earlier told
