Ghaziabad becomes first city to issue 'green bond', raises Rs 150 crore for wastewater reuse project
Ghaziabad became the second city in Uttar Pradesh and 10th in India to raise municipal bonds.
April 07, 2021 / 05:58 PM IST
Representative image (Source: Shutterstock)
Ghaziabad has become the first city in India to issue a 'green bond' for an environmentally sustainable project of wastewater reuse, the Union Ministry of Housing and Urban Affairs (MoHUA) said in a release on April 7.
Through the issuance of green bond, Ghaziabad has also become the second city in Uttar Pradesh and 10th in India to raise municipal bonds, Durga Shanker Mishra, MoHUA Secretary said.
The city's municipal body has raised Rs 150 crore for construction of a tertiary sewage treatment plant.
Mishra said that the amount raised through the bonds demonstrates the "confidence of the market in municipal bond segment" and is a "resounding validation of good governance in Uttar Pradesh".
The MoHUA Secretary added that raising bond is an "instrument for paradigm change" in urban governance.
It makes cities clean up their governance and financial systems, he claimed, further stating that it "triggers market oriented transparent city administration" and promotes self-reliance.
Mishra informed that coupon rate of 8.10 percent is the most competitive rate so far for Municipal Bonds in India. The issue was oversubscribed with 40 bids totalling to Rs 401 crores on BSE's EBP platform.
The MoHUA Secretary shared that nine more cities have earlier raised municipal bonds. These are Pune, Hyderabad, Indore, Amravati, Bhopal, Visakhapatnam, Ahmedabad, Surat and Lucknow.
He added that MoHUA has released Rs 207 crore as financial incentive to these cities to subvent interest rate equivalent to 2 percent for raising bonds.
Mishra urged other states with cities rated A+ and above to take up "this transformative path" expeditiously. He added that those cities rated below may reform their governance/ financial structures to improve ratings and then go for raising municipal bonds.