Mumbai: The BMC, Asia’s richest municipal body, is planning to raise around Rs 9,500 crore through municipal bonds, a move that is set to become the largest municipal bond issued by any urban local body in India.The BMC plans to issue the bonds this financial year — mostly by December. Civic officials said a decision is yet to be taken on whether the bonds will be floated in a single tranche or in phases.“As part of the process, the BMC has shortlisted three firms to manage the proposed bond issue,” said additional municipal commissioner Abhijit Bangar, in charge of the finance department. The shortlisted firms — AK Capital Services Ltd, Tipsons Consultancy Services Pvt Ltd, and Trust Investment Advisers Pvt Ltd — will act as merchant bankers for the bond issuance process.“Borrowing for capital works is a sound financial strategy, provided it is backed by a credible repayment plan. We have to ensure that we are in a position to service the debt and comply with all financial norms,” said Bangar, adding that the BMC expects several of its major infrastructure projects to reach peak expenditure over the next two years, making external financing an important part of its long-term capital investment strategy.This move is part of BMC’s plan to diversify its funding sources for capital-intensive infrastructure works instead of relying solely on its own revenues. Civic officials said the BMC is exploring market borrowings to fund capital-intensive projects, including the seven sewerage treatment plants, the Rs 13,000-crore integrated flood control master plan, which recently received an approval from the Centre, pumping stations, tunnels, and major road infrastructure projects such as the Goregaon-Mulund Link Road.Officials clarified that while the proposed bond size is around Rs 9,500 crore, the BMC is yet to finalise the issue structure, timing and the specific projects that will be financed. The current exercise is aimed at appointing experts who will guide the corporation through the technical, financial and regulatory process of issuing bonds.“While several urban local bodies have tapped the bond market over the past decade, none has attempted an issue of the scale proposed by the BMC,” said an official, adding that the selected merchant bankers will coordinate the entire process, including obtaining credit ratings, preparing the issue structure and ensuring compliance with market regulations.The Pune Municipal Corporation raised Rs 200 crore through bonds in 2017, Greater Hyderabad Municipal Corporation over Rs 495 crore across multiple issues in 2018 and 2019, Indore Municipal Corporation floated tranches of Rs 139.9 crore in 2018, and Rs 244 crore in 2023, Ahmedabad Municipal Corporation issued Rs 200 crore bonds in both 2019 and 2024, and Ghaziabad Nagar Nigam raised Rs 150 crore through India’s first certified green municipal bond in 2021.The BMC said obtaining a credit rating will be among the first steps before floating the bonds. The merchant bankers will appoint credit rating agencies and advise the civic body on the issue size, repayment structure and timing of the bond issue. Officials said the repayment period for municipal bonds is generally long-term, with a tenure of around 15 years, allowing civic bodies to spread repayments over a longer horizon instead of opting for conventional borrowing.The civic body is also exploring the bond route in the context of the Centre’s Urban Challenge Fund, under which urban local bodies are expected to mobilise a portion of project financing through market borrowings. Officials said the fund envisages a financing model where 25% of the funding comes from the Centre, 25% from the urban local body and the remaining 50% is mobilised from the open market.The BMC budget 2026-27 had stated that the civic body is planning to raise Municipal Green Bonds for financing its sustainable infrastructure such as waste water treatment and desalination plants. This, officials had said, would not only support India’s Sustainable Developmental Goals commitments and net zero goals but also help to achieve Mumbai’s Climate Action Plan attracting Environmental, Social and Governance focused institutional investors.“A strong momentum has been induced towards issuance of municipal bonds for sustainable development projects with the Finance Minister announcing a Rs 100 crore incentive for a single municipal bond issuance of Rs 1000 crore in Budget 2026 along with incentives under AMRUT 2.0 mission. BMC has already initiated the process of appointment of Credit Rating Agency and will be initiating further process for raising Municipal Green Bonds to finance its sustainable development,” the municipal commissioner had said in his budget speech.If the proposal goes ahead, Mumbai’s civic body will not only mark its maiden entry into the municipal bond market but also set a new benchmark for the country’s urban infrastructure financing.Merchant Bankers Shortlisted To Manage Process* AK Capital Services Ltd* Tipsons Consultancy Services Pvt Ltd* Trust Investment Advisers Pvt LtdTheir Role:* Structure the bond issue* Obtain credit ratings* Advise on issue size & timing* Ensure regulatory compliance* Market the bond to investors
