PMC to return unused ₹200-cr municipal bond funds to investors

PMC will have to return ₹200 crore raised through its first municipal bond next year, nearly a decade after the funds were mobilised from the capital market but remained largely unused for civic projects

PUNE: The Pune Municipal Corporation (PMC) will have to return ₹200 crore raised through its first municipal bond next year, nearly a decade after the funds were mobilised from the capital market but remained largely unused for civic projects.

PMC will have to return ₹200 crore raised through its first municipal bond next year, nearly a decade after the funds were mobilised from the capital market but remained largely unused for civic projects. (Getty Images/iStockphoto (PIC FOR REPRESENTATION))

PMC accounts officer Ulka Kalaskar said the civic body had raised ₹200 crore through a municipal bond issue under the Centre’s urban financing push. “The amount was kept in a fixed deposit, and we will have to return it next year,” she said.

When asked whether the move had resulted in losses for the civic body, Kalaskar said the corporation earned returns from the deposit. “We received interest income through the fixed deposit and also got a two per cent incentive from the central government,” she said.

PMC was among the first municipal corporations in the country to raise funds through municipal bonds after the new policy was announced to encourage urban local bodies to access the capital market. The civic body had planned to use the funds for various infrastructure projects.

The bond issue was oversubscribed with PMC raising ₹200 crore within two days of its opening. However, the funds remained idle for nearly a year before being placed in fixed deposits.

For the past nine years, the money has largely remained parked in fixed deposits. With the 10-year tenure of the bond nearing completion, PMC will now have to repay the amount to investors next year.