After issuing municipal bonds for Lucknow Municipal Corporation, the Uttar Pradesh government has decided to issue similar bonds for Varanasi Municipal Corporation.
“Varanasi is set to become the second city after Lucknow to raise a Rs 200-crore fund by issuing municipal bonds. The fund raised will be invested in various infrastructure schemes and development of Varanasi,” a senior official said in Lucknow on Wednesday.
The official further said that the fund would not only boost the growth of various sectors but would also help in developing international standards and works in Varanasi. The process would also help investors in the city and promote tourism. Taken together, this will help bolster the government’s income. he added.
With the increase in Varanasi Municipal Corporation limits, 89 new revenue villages have been added to it from where the municipal corporation will increase its income through various activities and provide employment opportunities.
Varanasi Municipal Commissioner Gaurang Rathi said that for issuing the municipal bonds, a consultant firm or merchant banker would be selected and a tender had been floated in which nine companies could participate as per the Central government guidelines.
The companies include AK Capital Services Limited, Axis Bank Limited, Darashaw & Company Private Limited, ICICI Bank Limited, ICRA Management Consulting Services Limited, SBI Capital Market Limited, Spa Capital Advisor Limited, SREI Infrastructure Finance Limited, and Yes Bank Limited.
Besides, Varanasi Municipal Corporation Chief Accounts Officer Manoj Tripathi said that CRISIL, ICRA, CARE, were working agencies out of which two agencies need to be rated. Municipal bodies of Double-A or Triple-A can issue bonds but the current investment rating of Varanasi Municipal Corporation is Triple B which is required to be reformed and converted into Double-A for investment.
A municipal bond is a kind of a credit card from which funds are raised. A bond issuing institution borrows money from the market for a fixed time and guarantees the return of the principal along with the interest.
