HYDERABAD: Ministry of Housing and Urban Affairs (MoHUA) has agreed to extend financial incentives for municipal corporations for issuing municipal bonds for the year 2019-20 also. The Greater Hyderabad Municipal Corporation (GHMC) is contemplating to float municipal bonds of Rs 305 crore for implementing Strategic Road Development Plan (SRDP) for construction of flyovers, grade separators and underpasses for easing traffic congestion in the city.
The incentive to each Urban Local Body (ULB) will be limited to Rs 26 crore at Rs 13 crore per Rs 100 crore of bonds issued. This will be met from the funds allocated to reform incentive for the year 2019-20 by the housing ministry. If GHMC plans to float bonds for Rs 305 crore, it would get incentives of `26 crore for Rs 200 crore bonds only and for remaining Rs 105 crore there would be no incentive which is to the tune of Rs 13 crore. The incentive will be awarded only after successful issue of municipal bonds by the ULBs.
As many as eight ULBs were issued bonds and were incentivised with Rs 181.33 crore by the ministry during 2018-19. Requests have been received from ULBs in Pune, Ahmedabad, Surat, Hyderabad, Visakhapatnam, Bhopal and Indore for providing financial incentives for issuing bonds for this also. Based on the request, MoHUA Joint Secretary Manish Thakur sent a letter to the State informing that they have decided to extend the incentive to 12 ULBs for the current financial year for issuing municipal bonds on a first come, first serve basis.
The ULBs, after obtaining all approvals from SEBI and after issuing municipal bonds should approach the ministry for claiming incentive under the scheme by submitting documents along with the proposal which includes ULB resolution to float bonds. Under the municipal bonds, GHMC had proposed to raise `1,000 crore in a phase-wise manner. Previously, GHMC had raised Rs 395 crore through municipal bonds in two tranches (Rs 200 crore in the first tranche in February last year at a coupon rate of 8.90 per cent and Rs195 crore in the second tranche this year at a cut-off coupon rate of 9.38 per cent).