GHMC to raise Rs 3,500 crore through bonds, RTL
By S Bachan Jeet Singh | Express News Service | Published: 03rd March 2017 05:16 AM |
HYDERABAD: The cash-strapped Greater Hyderabad Municipal Corporation(GHMC) has drawn up plans to raise a whopping Rs 3,500 crore to fund developmental projects in the city.
For the first time, it will raise a Rs 2,500-crore fund in the form of Rupee Term Loan (RTL) and Rs 1,000 crore in municipal bonds. In the past, the GHMC had floated municipal bonds but not RTL.
The funds thus raised will be used to execute the state government flagship two-bedroom houses (2BHK) for poor and weaker sections programme, the Strategic Road Development Plan (SRDP) and other infrastructure projects in the twin cities. The total cost of SRDP is estimated at around Rs 22,000 crore. The corporation has invited requests for proposal from financial institutions for acting as merchant banker for GHMC to raise municipal bonds as well as RTL.
A merchant banker is a financial institution that provides capital to companies in the form of share ownership instead of loans.
The merchant banker is required to advise the GHMC on the regulatory norms and assist it in securing approval and exemptions where necessary from various regulatory agencies including SEBI, stock exchanges and Reserve Bank of India.
It is also to assist GHMC in the selection of intermediaries to issue of non-convertible debentures (NCD) such as the registrar and transfer agent, debenture trustee and coordinate with these intermediaries.
For RTL, the merchant banker should understand the underlying revenue and cost model of GHMC, prepare the necessary financial projections and short-list potential banks, financial institutions in consultation with the GHMC for further discussion and assist the GHMC in obtaining sanctions.
Criteria for a merchant banker
The corporation officials said that the merchant banker would be selected having a valid Securities and Exchange Board of India (SEBI) registration certificate as a Category-1 merchant banker and should be empanelled with the Ministry or Urban Development (MoUD) as a technical advisor for issuing the municipal bond.
They should have also acted as an arranger for at least one issue of municipal corporation as per prime database.The banker should have raised at least Rs 1,000 crore for a single borrower and an aggregate amount of Rs 5,000 crore by way of long-term rupee loans from banks in at least one of the last three years including the current financial year.