Nashik Municipal Corporation Aims to Raise Rs 200 Crore Through Green Bonds by February

The Nashik Municipal Corporation (NMC) plans to raise an additional Rs 200 crore through municipal bonds by February next year, according to Manisha Khatri, the municipal commissioner. At a recent listing event for their initial Rs 200 crore fundraise, Khatri mentioned that the civic body is gearing up for another bond issue. This upcoming issuance will be a green bond, differing slightly from the first issue, which was oversubscribed four times.

The proceeds from this new bond will be allocated towards preparations for the Kumbh Mela in 2027 and ensuring a continuous water supply in the city. A senior official noted that the NMC is considering a public issue, which might increase borrowing costs but would attract a broader investor base. The initial Rs 200 crore issue saw participation from three institutions, including the National Bank for Financing Infrastructure and Development.

Municipal Bonds and Incentives

Khatri highlighted that the coupon rate for the first bond issue stands at 7.8 per cent. However, she explained that due to government incentive schemes, the effective interest cost is virtually negligible. Over five years, the total interest outgo is Rs 80 crore, while incentives exceed Rs 94 crore. Specifically, Rs 26 crore will come from the AMRUT scheme by the Union Ministry of Housing and Urban Affairs, with additional incentives from the Urban Challenge Fund.

Nashik is now the third city in Maharashtra to tap into municipal bond markets. Khatri believes many other cities have similar potential to secure funding through this method. The NMC has assessed its financial capacity and can raise up to Rs 1,000 crore via this route. To do so, they must adjust their bookkeeping practices and ensure timely revenue collection, particularly from property taxes.

Utilisation of Initial Funds

The funds raised from the first bond issue are earmarked for several projects. These include constructing a pedestrian bridge at Ram Jhula, developing a vending plaza near Kalaram Temple, establishing a command and control centre near Kapaleshwar Temple, and improving sewer networks in Panchavati, Satpur, and Nashik West administrative zones.

Chief Minister Devendra Fadnavis attended the listing ceremony held at the NSE on Tuesday. The NMC's efforts reflect a growing trend among Indian cities to explore innovative financing methods for urban development projects.

With inputs from PTI