The municipal bonds issue of the Lucknow Municipal Corporation (LMC) worth rupee 200 crore was listed at Bombay Stock Exchange on December 1, 2020.
- Lucknow has become the 9th city in the country to have raised municipal bonds.
- The bonds has been incentivized by the Ministry of Housing and Urban Affairs, Government of India under Atal Mission for Rejuvenation and Urban Transformation (AMRUT) Mission.
Significance of the issued bonds
- The issued bonds will ensure that the LMC gets Rupee 26 crore to subsidise its interest burden.
- This incentive would also reduce the interest burden by 2% on the municipal corporation.
- It will help in improving financial & municipal governance.
- It will also make city move on the path of self dependence.
- This bond will provide necessary support to develop the civic infrastructure.
- This will also boost the call for Aatma Nirbhar City under the flagship Aatma Nirbhar Bharat initiative.
It is a debt security which is issued by a state, municipality or county so as to finance its capital expenditures such as construction of highways, bridges or schools. They are exempt from the federal taxes, state and local taxes. This makes these bonds attractive to people of high income tax brackets.
Bond of Lucknow Municipal Corporation (LMC)
LMC had launched is maiden municipal bond issue on November 13, 2020. This bond is rated ‘AA’ by India Ratings and ‘AA (CE)’ by Brickwork Ratings. The proceeds of the issue will be invested in a water supply project that is being implemented under AMRUT scheme. The tenure of the bond is 10 years.