BMC Looks at Tokenised Bonds as Option to Raise ₹9,500 Crore for Infra Build
Source: E-Sutra / Zee Business
The Brihanmumbai Municipal Corporation (BMC), India's largest and richest municipal body, is preparing to launch the country's largest municipal bond programme worth ₹9,500 crore to accelerate major infrastructure and development projects across Mumbai. These include the Versova-Dahisar Coastal road, Gargai Dam project and sewage disposal systems, among others.
Speaking at a curated conversation at E-Sutra Zee Business' Bond Tokenisation Summit, BMC Joint Municipal Commissioner (Finance) Devidas Kshirsagar said the municipality will explore the possibilities of tokenised bonds that will give access to not just institutional financiers but also retail buyers, who have so far largely been left out of the space.
According to Kshirsagar, the BMC has strong financial resources and substantial bank deposits. However, its approach to funding infrastructure has evolved.
Earlier, the civic body would wait for annual revenue surpluses before undertaking major infrastructure projects. This often meant that projects had to wait for funds to become available, slowing down development.
The BMC is now adopting the principle of the "Time Value of Infrastructure" — raising funds from the market to undertake critical infrastructure projects without waiting for annual savings, thereby enabling projects to be completed faster and addressing the city's immediate requirements.
The ₹9,500-crore bond programme will support several large infrastructure and environmental projects that have a direct impact on Mumbai's transport, water supply and sustainability.
Work has begun on the North Coastal Road connecting Versova and Dahisar. The project is expected to be significantly larger than the South Coastal Road between Nariman Point and Worli. The Bandra-Versova section is being developed by the Maharashtra State Road Development Corporation (MSRDC).
The BMC is implementing a major sewage treatment programme aimed at reducing marine pollution and addressing environmental and climate-related challenges. Instead of releasing partially treated wastewater into the sea, the project will ensure that sewage is treated more comprehensively before discharge. The first phase is expected to be completed next year, with the entire project targeted for completion by 2030.
Mumbai currently receives around 4,500 million litres of drinking water per day. The BMC aims to increase this supply by approximately 500 million litres per day to meet the city's growing water requirements. After years of delays, the tendering and contracting process for the Gargai Dam Project has now been completed.
In addition to developing new water sources through dams, the BMC is also progressing with a desalination project that will remove salt from seawater and convert it into potable water.
The BMC intends to make the bond programme accessible not only to institutional investors such as banks and large financial institutions, but also to retail investors, enabling citizens to participate in financing Mumbai's development.
The corporation plans to issue the bonds in tranches beginning in early 2027. A public issue for retail investors could be launched by mid-2027.
Kshirsagar also indicated that the BMC could explore bond tokenisation, subject to approval from the Securities and Exchange Board of India (SEBI). Tokenisation could enable retail investors to purchase smaller portions of municipal bonds digitally through their mobile devices.
The BMC also plans to raise ₹1,000 crore through a dedicated green bond, with the proceeds intended to finance environmentally focused projects, including sewage treatment infrastructure.
The ₹9,500-crore programme could establish a new benchmark for municipal bond financing in India. Several municipal corporations, including those in Pune, Nashik and Pimpri-Chinchwad, have previously raised funds through municipal bonds, but their issuances were significantly smaller, generally in the range of ₹200-500 crore.
The Centre has also established a ₹1 lakh crore Urban Challenge Fund (UCF) to support urban development, with municipalities expected to mobilise funding from the market as part of the framework.
The BMC's proposed ₹9,500-crore bond programme could therefore serve as a model for other urban local bodies, encouraging them to strengthen their finances, adopt greater financial discipline and reduce their dependence on government grants for infrastructure development.