MMRDA Approved to Raise INR 50,000 Crore for Infrastructure Projects via Bonds

Funding Boost for Mumbai's Development - The Mumbai Metropolitan Region Development Authority (MMRDA) has been granted approval to raise INR 50,000 crore through bonds to finance various infrastructure projects in Mumbai and its surrounding areas.

Key Highlights

• Approval for Bond Raising: MMRDA gets the nod to raise INR 50,000 crore via bonds.
• Strategic Security: Land in BKC and Wadala Truck Terminal to be used as security.
• State Government Support: State government acts as guarantor for the bonds.
• Financial Context: INR 75,000 crore needed for 10 Metro projects.
• Current Financial Estimates: Receipts at INR 39,453 crore, expenditures at INR 46,921 crore for 2024-25.
• Loan Approvals: Loans up to INR 60,000 crore approved, with an additional INR 30,000 crore sanctioned.
• Revenue Generation: Focus on land deals and monetisation of Metro network assets.

Strategic Proposal and Approval

The proposal, which was presented at the MMRDA meeting chaired by Chief Minister Eknath Shinde, has received the green light. Sources revealed that MMRDA agreed to provide land in BKC, Wadala Truck Terminal, and other built-up areas as security for raising funds through bonds. These bonds are intended for long-term duration, with the state government consenting to act as guarantor.

Historical Context and Financial Strategy

In 2017, MMRDA had also planned to raise funds for Metro projects via LIC bonds. Facing a financial crunch due to projected infrastructure expenditures this decade, MMRDA's cumulative cost for 10 Metro projects, excluding Metro 3 (Colaba-Bandra-Seepz) and Metro 1 (Versova-Andheri-Ghatkopar), amounts to INR 75,000 crore.

Current Financial Landscape

For the fiscal year 2024-25, total receipts are estimated at INR 39,453 crore, while total expenditures are pegged at INR 46,921 crore. The state government has facilitated the approval for raising loans up to INR 60,000 crore, with an additional loan of INR 30,000 crore also sanctioned.

Loan Allocations and Guarantees

A loan of INR 30,593 crore from the approved amount has been allocated by the REC. The government has guaranteed a loan of INR 12,000 crore in the first tranche and has submitted a proposal for guaranteeing another INR 12,000 crore in the second tranche. The proposal for a loan of INR 50,301 crore has also been approved by the PFC.

Monetisation and Revenue Generation

In addition to monetising its assets, MMRDA has appointed SBI Capital Markets to raise loans. Despite these efforts, a regular stream of funds is necessary to execute major projects. MMRDA plans to cover 15% of the costs from its own reserves, with the remaining 50% to be raised through loans and bonds.

MMRDA aims to generate revenue through land deals and asset monetisation, particularly focusing on the Metro network.