The Pune Municipal Corporation (PMC) general body approved on Wednesday the appointment of a Merchant Banker for the civic body to explore the possibility of raising funds for major development projects through municipal bonds or loans. The civic administration had tabled the proposal for appointment of Merchant Banker before the standing committee to take up the process of raising funds for PMC projects through municipal bonds, but the committee rejected it.
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It was then submitted to the general body, which made an amendment, allowing the appointment of the Merchant Banker merely to explore the possibility of raising funds through municipal bonds or loans but to proceed with the actual process of raising funds only after the general body’s approval.
“The PMC has good credit rating, which it has been retaining for the past two years. The highest rating among all municipal corporations in the country would give PMC an opportunity to be the first one to raise funds for development work through municipal bonds,” said municipal commissioner Kunal Kumar.
The SBI Capital Service Ltd would be the Merchant Banker for PMC. “It would study the possibility for PMC to raise funds through municipal bonds or loans. The best possible option would be tabled in the general body meeting for approval,” he added.
The payment to Merchant Banker would be 0.05 per cent of the funds being raised through municipal bonds or loans in the next five years, said Kumar, adding, “The highest credit rating means the financial institutions considers the PMC to be capable of raising funds from market.”
The civic administration had intended to raise Rs 2,000 crore from the market to enable the implementation of equitable and uninterrupted water supply system project in the city, he added.
Elected representatives of all political parties raised concern over likely burden of loan on PMC if funds are raised from the market. “We need to be careful when we raise funds from the market. This might lead to financial crisis of the civic body,” said Congress leader Ulhas Bagul.
NCP leader Vishal Tambe said that it was due to the refusal of the BJP-led union and the state government to provide funds for implementation of the projects, which had been planned after the assurance of the previous Union and state government.
“The situation of raising funds from the market would not have arised if the Union and state government had implemented the decision of funding the projects,” he said.