Vadodara: The recent successful bond issuance by the Vadodara Municipal Corporation (VMC) sets a precedent for other municipal corporations across India to explore financial self-sufficiency. After raising a staggering ten times the original issue amount of Rs. 100 crore, the VMC's fiscal strategy is becoming a model for other corporations.
This significant achievement has led the Securities and Exchange Board of India (SEBI) to invite Chief Accountant of VMC, Santosh Tiwari, to provide guidance at the Eastern Region corporation's meeting held in Bhubaneswar.
The bonds were issued under the stewardship of then Municipal Commissioner Shalini Agarwal, propelling the VMC to a prominent position nationwide due to the overwhelming response to the bond offering.
The central government's ongoing support for initiatives to make municipal corporations self-reliant has spurred the decision to issue municipal bonds to finance development projects. Workshops on the Municipal Bond Outreach Program are being organized across regions, providing a platform for stakeholder engagement and guidance on bond processing.
A recent workshop in Bhubaneswar saw representatives from ten North Eastern states and 22 cities yet to issue bonds receive instructions from merchant bankers, legal trustees, stock exchanges, and investors.
At this workshop, Tiwari emphasized the importance of bonds in achieving corporate self-reliance. He highlighted how the VMC received ten times the deposit amount on the Rs. 100 crore bond, set to pay 7.15 percent interest. The central government's promise of a Rs. 13 crore incentive effectively reduced the corporation's interest rate to just 4.55 percent.
Tiwari also detailed the preparation the VMC undertook ahead of the bond issue, including settling pending balance sheets, obtaining credit ratings, and ensuring timely loan repayments, all of which bolstered their creditworthiness. The corporation also transparently communicated potential legal risks to investors, a move that proved beneficial in building trust.
Tiwari disclosed plans for a green bond issuance worth Rs. 100 crore under the Amritam Yojana Part II next year, with an expected incentive of Rs. 10 crores. He advocated this bond issuance strategy for all municipal corporations across the country to achieve financial self-sufficiency.
