Rajkot (Gujarat) [India] November 13: The Rajkot Municipal Corporation (RMC) has achieved a significant milestone in urban infrastructure development by raising Rs. 100 crore through a municipal bond issue. Oversubscribed by 4.95 times, this bond issue reflects strong investor confidence and underlines RMC's dedication to fiscal discipline, transparency and innovation in urban governance.
The Rs. 100 crore bond, issued with a five-year tenure at a 7.90% interest rate and rated AA by CRISIL, was offered on the National Stock Exchange's Electronic Bidding Platform. The Government of India's Rs. 13 crore interest subsidy for cities issuing municipal bonds will help reduce the average borrowing cost for RMC, making this financing even more sustainable.
The successful bond issue follows a series of internal reforms by the RMC aimed at enhancing fiscal responsibility and transparency. Over the years, RMC has worked to improve its credit rating from A- to the current AA, showcasing its robust financial health and well-managed operations.
Rajkot, the fourth-largest city in Gujarat, has experienced rapid population growth driven by high migration from the Saurashtra region. Known for its vibrant MSME sector and a thriving light automobile ancillary industry, the city's geographic footprint has expanded to 164 sq km. This growth has created an urgent need for expanded urban infrastructure, especially in areas newly integrated within RMC's jurisdiction.
The proceeds of the bond issue will be used for developing water supply and sewerage infrastructure projects in areas newly merged into the Rajkot city limits. These projects include a 23 MLD sewage treatment plant, a 14 MLD elevated storage reservoir, and a 500 km network for water distribution and sewerage collection. This infrastructure investment aligns with RMC's broader mission to provide high-quality urban services to Rajkot's growing population.
The RMC has long been a leader in adopting innovative governance practices. Among its pioneering moves, RMC was one of the first in Gujarat to implement outsourcing and privatisation initiatives as early as the 1990s. It not only delivers essential services like water supply, sewerage and solid waste management, but also maintains amenities such as a zoo, planetarium, libraries, sports facilities and auditoriums, reflecting its commitment to setting new benchmarks for municipal governance and ensuring a thriving environment for its citizens.
The bond issuance will enhance RMC's transparency and accountability. As part of its bond compliance, RMC will strengthen its internal controls and implement systematic performance review mechanisms to ensure effective oversight of financial and non-financial data. This aligns with RMC's goal to match the standards of progressive Indian cities such as Ahmedabad, Surat, Pune and Indore.
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