Vadodara: Vadodara Municipal Corporation has issued bonds twice so far, in which investors have shown unprecedented enthusiasm, and now a new public issue is planned to be issued in the coming days. This public issue of blue bonds will be of Rs 200 crore, in which small investors can also participate.
What is a municipal bond and its uses?
A municipal bond is a type of instrument that is issued by local government bodies, such as municipalities, municipalities or other local authorities, to raise funds from the public. By issuing this bond, the municipal corporation borrows money from investors and in return promises to pay investors interest periodically at a fixed interest rate.
At the maturity of the bond, the municipal corporation pays back the principal amount to the investors. These bonds are generally used to fund city development projects such as construction of roads, improvement of water supply and sewerage system, construction of bridges, development of public transport facilities, construction of parks or construction of other infrastructure facilities.
Standing Committee approves appointment of agency
Vadodara Municipal Corporation had earlier issued two bonds. Now the platform has been set for issuing public issue of blue bonds. Through these blue bonds, efforts will be made to solve the water problem of the city with public participation. After the announcement of issuing blue bond issue in the budget, a proposal was made in the Standing Committee meeting to approve the works including appointment of an agency, which has been approved and the authority for this has been given to the Municipal Commissioner.
What are the benefits of bonds to investors?
Some investors emphasize on making safe investments. Fixed interest is fixed in the bonds issued by the corporation, which they get every six months. When the term expires, they get back the amount they invested. Investors feel safe investing in bonds because a government institution will never go bankrupt. Apart from this, they get better and safer returns than investing elsewhere.
