Patna: Patna Municipal Corporation (PMC) is set to raise Rs200 crore through municipal bonds after the Bihar cabinet approved the civic body’s proposal to access market-based funding for developing organised vending zones, redeveloping the New Market near Patna Junction and financing other priority projects.The urban development and housing department has issued a notification approving the proposal under the Bihar Municipal Act, 2007, and the SEBI (Issue and Listing of Municipal Debt Securities) Regulations, 2015. The proposal earlier received unanimous approval at the 19th meeting of PMC’s Empowered Standing Committee on Jan 12.According to the notification, the bond proceeds will primarily finance organised vending zones and capital investments for redevelopment of the New Market near the Patna Junction. It also allows the PMC to deploy the funds for other eligible priority projects if execution of any identified work is impeded, ensuring optimum utilisation of resources and sustained revenue generation.The Rs200-crore bond will be issued as a single-tranche, general revenue-backed bond with a 10-year tenure and listed on the National Stock Exchange through a private or public placement route. Eligible investors include govt institutions such as NABFID and IIFCL, banks and financial institutions, insurance companies, mutual funds, provident and pension funds, and corporates. The coupon rate will be discovered through the stock exchange’s electronic bidding platform.The notification states that the PMC will repay the principal and interest from its internal revenue sources, with principal repayment proposed to begin after the fourth year of issuance. The civic body has also been directed to appoint a SEBI-registered merchant banker, legal adviser, credit rating agency, debenture trustee and other intermediaries, besides complying with all disclosure and reporting requirements.To safeguard timely debt servicing, the PMC will create an Escrow Account, Interest Payment Account, Sinking Fund and Debt Service Reserve Account (DSRA). The govt has directed the PMC to ensure that servicing the bonds does not affect essential municipal services and to ring-fence identified revenue streams. A Bond Issuance Committee, headed by the municipal commissioner, has been authorised to finalise the issue, appoint intermediaries and complete all formalities. The notification has come into force with immediate effect.
