Ahmedabad civic body gets nod to raise Rs.1.5 billion

March 26th, 2008 - 4:10 pm ICT by admin  

Ahmedabad, March 26 (IANS) The central government has given the Ahmedabad Municipal Corporation (AMC) six more months to raise Rs.1.5 billion through a tax-free bonds issue. The issue deadline has been extended till September, Municipal Commissioner I.P. Gautam told reporters.

“The issuing of bonds will help generate funds that can go into developmental projects,” he said adding: “AMC will enter the market by next week or in April.”

AMC had earlier assigned two financial agencies Gujarat State Financial Service (GSFS) and SBI-Cap to conduct a market survey.

“The funds garnered through tax-free municipal bonds would be helpful to meet 35 to 45 percent capital cost of the development projects listed under the Jawaharlal Nehru Urban Renewal Mission and other civic schemes, said an AMC official.

Rating agency CARE monitors the AMC finances as of now. On March 8, 2007, the urban development ministry had permitted AMC to issue tax-free bonds worth Rs.1.5 billion but high interest rates stopped the AMC from entering the market until September.

The AMC wanted more time from the central government and a notification issued by the central government in January last year had directed the corporation to mobilise Rs.1.28 billion through bonds.

AMC was the first civic body in South Asia to issue bonds worth Rs.1 billion in 1998, paying 14 percent interest.

This was followed by another release of Rs.1 billion in 2002 that was tax-free for the first time, with an interest rate of nine percent.

The third tax-free bonds worth Rs.580 million was issued in 2004 at an interest rate of 6.4 percent while another tax-free bond worth Rs.1 billion was issued in 2005 at an interest rate of six percent.

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