Ghaziabad Nagar Nigam issued India’s first Certified Green Municipal Bond

Under Swachh Bharat Mission-Urban, Ghaziabad issued India’s first Certified Green Municipal Bond.

• The bond raised ₹150 crore for a Tertiary Sewage Treatment Plant (TSTP).
• Supported by the Government of India and Government of Uttar Pradesh.
• Significance:
• Promotes sustainable infrastructure and urban resilience.
• Serves as a blueprint for future urban development, integrating financial discipline with environmental responsibility.

Municipal Bonds in India: Context and Challenges

• Cities like Pune, Bhopal, and Ghaziabad have issued municipal bonds for civic projects.
• Despite encouragement from SEBI (Indian market regulator), uptake remains limited due to:
  • Low liquidity
  • Limited public awareness
  • Weak perception of local body governance

Key Facts About Municipal Bonds

• Definition: Non-convertible debt securities issued by municipal corporations via private placement or public offering.
• Usage: Finance capital expenditure projects like:
  • Highways
  • Bridges
  • Schools
  • Public utilities
• Typical Features:
  • Tenure: 4 to 10 years
  • Coupon rate: 7.15% – 10.23%
• Funding Sources for Municipal Corporations:
  • Central and state government grants
  • Loans from financial institutions or global firms
  • Municipal bonds (no sovereign guarantees)
• Availability:
  • Through bond dealers, banks, brokerage firms, or directly from municipalities
  • Traded on stock exchanges like the NSE