BMC eyes green bonds, seeks relaxation in tender rules for credit rating firm

Mumbai: The BMC has sought ex-post facto approval from its standing committee to relax a key tendering condition under the Mumbai Municipal Corporation Act, 1888, in order to appoint a credit rating agency critical for raising funds for major infrastructure projects.In a proposal placed before the committee, the civic body has requested exemption from the requirement of publishing tenders on its official website under Section 72(3) of the Act. Officials argued that the relaxation was necessary given the specialised nature of the work and the limited pool of eligible agencies regulated by the Securities and Exchange Board of India (SEBI).The move comes as the BMC looks to secure funding through green bonds for a slew of ongoing and proposed infrastructure projects. These include sewage treatment plants under the Mumbai Sewerage Project Phase-II at Worli, Dharavi, Versova, Bhandup, Ghatkopar, Bandra and Malad, as well as desalination, water tunnel works and the proposed Gargai dam project.To facilitate future borrowing, the civic body requires an issuer credit rating, which can only be assigned by SEBI-registered agencies. Of the eight such agencies in India, the BMC directly invited proposals instead of issuing a public tender.Five agencies responded to the Request for Proposal (RFP), of which three were found technically responsive after scrutiny. Following technical and financial evaluation, India Ratings and Research Pvt Ltd emerged as the top-ranked bidder with a composite score of 96, ahead of CRISIL Ratings Ltd and CARE Ratings Ltd. The contract has been awarded to India Ratings and Research Pvt Ltd at a cost of ₹1.49 lakh plus applicable taxes.Civic officials maintained that since the pool of eligible bidders was already restricted to SEBI-registered entities, publishing the tender on the municipal website would not have served any additional purpose. They have now sought the standing committee's approval to formally waive the requirement in this case.The BMC budget 2026-27, which was announced in Feb this year, stated that the civic body is planning to raise Municipal Green Bonds for financing its sustainable infrastructure, such as wastewater treatment and desalination plants.This, they said, will not only support India's Sustainable Development Goals commitments and net-zero goals but also help to achieve Mumbai's Climate Action Plan, attracting Environmental, Social and Governance-focused institutional investors. "A strong momentum has been induced towards issuance of municipal bonds for sustainable development projects, with the Finance Minister announcing a ₹100 crore incentive for a single municipal bond issuance of ₹1000 crore in Budget 2026, along with incentives under AMRUT 2.0 mission. BMC has already initiated the process of appointment of Credit Rating Agency and will be initiating further process for raising Municipal Green Bonds to finance its sustainable development," the municipal commissioner said in his budget speech.
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