The Kolkata Municipal Corporation (KMC) is working on floating municipal bonds to raise Rs 1,050 crore from the market, civic officials said.
Mayor Firhad Hakim told The Telegraph the money would be used to develop infrastructure such as roads.
Hakim said the state finance department and the Reserve Bank of India (RBI) have agreed to the civic body’s proposal.
The KMC had floated bonds during Subrata Mukherjee’s tenure as mayor, said Hakim.
According to officials, the response was poor last time.
A senior official of the KMC said credit rating agency CRISIL has given the civic body AA- rating, which is the fourth grade from the top. The rating, which shows the creditworthiness of the KMC, came about a month ago.
The official said they had expected a better rating.
“The KMC will issue municipal bonds. We are working on it. The RBI and the state finance department have agreed to our proposal to issue bonds,” Hakim told The Telegraph.
“If all goes well, we will issue the bonds before the Puja. Our plan is to raise money from people and fund building infrastructure and other development work. We will also use the money to build better roads,” Hakim said.
The rate of interest and the tenure of the bonds will be fixed later, said an official.
“Our plan is to raise Rs 1,050 crore in three tranches of Rs 350 crore each,” he said.
The KMC will also need approval from the Securities and Exchange Board of India (SEBI) to issue the bonds. The state finance department is now considering the KMC’s proposal to hire an advisor and consultant, said a KMC official.
The civic body has proposed the name of the investment-banking subsidiary of a nationalised bank for the job. “We have no expertise in issuing bonds. They will do the entire job of issuing and selling the bonds on our behalf,” he said.
The RBI in its Report on Municipal Finances, published in November 2022, suggested that municipal corporations explore the idea of floating bonds to augment their finances.