Varanasi to float municipal bonds of Rs 200 crore

Virendra Singh Rawat

Lucknow / Jan 1, 2021

Varanasi, the parliamentary constituency of Prime Minister Narendra Modi, is planning to issue municipal bonds of Rs 200 crore.

In December 2020, Lucknow Municipal Corporation (LMC) had become the first North Indian city to list bonds of Rs 200 crore on the Bombay Stock Exchange (BSE).

Now, Varanasi Municipal Corporation (VMC) has constituted a committee under the chair of additional commissioner for taking steps to float the bonds. Recently, 89 new revenue villages were annexed to Varanasi to provide the civic body more resources for development and revenue.

Bond is a debt security to finance capital expenditure, wherein an investor gets repayments on a predetermined rate of interest over a stipulated period. The funds raised by a municipal body could be ideally invested in various infrastructure projects.

Apart from Varanasi, the Yogi Adityanath dispensation is egging other municipal corporations including Ghaziabad and Agra to raise funds through bonds, which not only generate funds but also cultivates a positive image among investors.

Whereas, municipal bodies with AA or AAA rating could issue bonds, the current investment rating of VMC is BBB, which needs to improve to AA for becoming investment grade.