Gurgaon: MCG to issue municipal bonds to raise funds | gurgaon | Hindustan Times
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Gurgaon: MCG to issue municipal bonds to raise funds

According to officials, they won’t have to wait for funds to be sanctioned if they can raise them on their own

gurgaon Updated: May 23, 2017 23:21 IST
Kartik Kumar
The Municipal Corporation of Gurugram (MCG) office in Sector 34.
The Municipal Corporation of Gurugram (MCG) office in Sector 34.(Parveen Kumar/HT File)

The Municipal Corporation of Gurugram (MCG) has opened tenders for agencies to carry out detailed credit assessment and rating to start the process of issuing municipal bonds. Officials said they will use the investments to accelerate development projects.

According to MCG officials, the introduction of municipal bonds can help them raise funds directly and also execute projects on time, instead of waiting for funds to be sanctioned by the state government or public bodies.

“Securing a credit rating is the first step towards the broader objective of issuing municipal bonds. Since most urban infrastructure projects need heavy financing, bonds can provide the capital for projects instantly,” Amit Khatri, former additional commissioner of MCG said.

Khatri was recently appointed the deputy commissioner of Jind. Prior to his appointment, he was heading the process of issuing bonds.

Khatri said that municipal bonds provide an alternative and attractive option for investors, besides fixed deposits and saving schemes, as they are tax-free and the interest rates conform to market trends. Also, the option of trading does not restrain an investor from holding on to their bonds until maturity, officials said.

MCG officials said that the bonds are being introduced as a part of the Capacity Building for Urban Development project, under the ministry of urban development.

Although municipal bonds have been in existence since 1997 in Nashik, Bangalore, Madurai and Ahmedabad, it was exclusively offered to private institutions. However, following changes in policies by the Securities and Exchange Board of India in 2015, municipal bonds can be offered to the public, listed on stock exchanges and traded.