Patna Municipal Corporation to Raise ₹200 Crore Through Municipal Bonds, Prepares for Stock Market Listing

Patna: In a significant step towards financial self-reliance, the Patna Municipal Corporation (PMC) is set to issue a municipal bond in April, aiming to raise ₹200 crore. The bond is expected to be listed on the NSE and BSE by August. Funds raised will be utilized for the development of the city’s water supply, roads, and sanitation infrastructure.

Bihar’s First Municipal Body on the Stock Market
Traditionally responsible for civic maintenance, municipal corporations in India are now exploring capital markets as a means to raise funds, similar to companies issuing shares. Patna Municipal Corporation is preparing to become the first municipal body in Bihar to tap into the stock market, reducing its dependence on government grants.

According to PMC Commissioner Yashpal Meena, the bond proceeds will help provide improved services to the city’s population of 30 lakh while enabling the corporation to independently finance development projects.

₹200 Crore Fundraising Plan
The municipal bond will serve as a secure investment option for retail investors and financial institutions. The raised funds will be directly invested in urban infrastructure projects, reducing the corporation’s financial reliance on the state and central governments.

Process for Issuing Municipal Bonds
Issuing a municipal bond requires prior approval from the state government, following a detailed assessment of the corporation’s financial capacity. The PMC must present audited balance sheets showing clear records of stable revenue sources, such as property tax and water charges.

Before issuance, a SEBI-approved agency will assign a credit rating, with a minimum ‘A’ rating generally required for a successful bond. The bond’s structure—including total amount, interest rate, maturity period, and tax status (tax-free or taxable)—is finalized according to SEBI regulations to ensure investor protection and municipal accountability.

Committee to Oversee Bond Issuance
To ensure transparency and smooth execution, a “Bond Issuance Committee,” chaired by the PMC Commissioner, will oversee the process. The committee will finalize the bond’s framework, coordinate with rating agencies, and set the issuance terms. The matter has also been included as a key agenda item in the PMC council meeting scheduled for February 7.

Municipal bonds in India were first introduced by the Bruhat Bengaluru Mahanagara Palike, establishing a modern model for municipal bodies to independently raise funds for urban development.