BMC Plans ₹10,000 Crore Green Bond Issue to Fund Mumbai’s Water Projects Amid ₹2.34 Lakh Crore Liabilities

The Brihanmumbai Municipal Corporation (BMC) is planning to raise between ₹5,000 crore and ₹10,000 crore through green municipal bonds to fund major water supply and wastewater management projects across Mumbai. The proposed move comes as the civic body faces financial liabilities of around ₹2.34 lakh crore and continues to invest in large infrastructure projects.

Green Bonds to Support Water Supply and Wastewater Infrastructure

To prepare for the proposed bond issue, the BMC has invited Expressions of Interest (EoI) to appoint a debenture trustee. The move is part of its efforts to explore new funding options and reduce its dependence on internal revenue sources for infrastructure development.

BMC Plans Major Investment in Mumbai’s Water Infrastructure

The proposed green bond issue will help finance several important projects aimed at improving Mumbai’s water supply and wastewater treatment capacity. These projects are expected to strengthen the city’s infrastructure and support its growing water requirements.

The planned investments include wastewater treatment plants in Dharavi, Versova, Bhandup, Ghatkopar, Bandra, and Malad. The BMC is also considering funding for a desalination plant, water tunnel projects, and the proposed Gargai dam.

The Gargai dam project is expected to increase Mumbai’s water supply capacity by around 440 million liters per day (MLD). Additional water infrastructure could help the city meet future demand and improve the reliability of its water supply system.

Preparations for Green Bond Issuance Underway

The BMC has already selected an agency to assess its credit rating and finalized the banks that will manage the proposed bond issuance. These arrangements are important steps toward bringing the municipal bonds to market.

According to the civic body's plans, the appointed agency will oversee the issuance process and investor-related arrangements, including liquidity support, for 15 years.

The BMC is also seeking to appoint a debenture trustee to independently represent bondholders and protect their interests. The trustee will play an important role in ensuring that the bond issuance follows the applicable requirements and safeguards investors.

If completed successfully, the proposed green bonds could give the civic body access to an additional source of long-term funding for essential public infrastructure.

Union Budget Offers Incentive for Municipal Bonds

The proposed fundraising plan comes amid efforts to encourage cities to use municipal bonds to finance urban development. In the Union Budget 2026-27, Finance Minister Nirmala Sitharaman announced an incentive of ₹100 crore for a single municipal bond issuance worth ₹1,000 crore.

Such incentives are intended to encourage urban local bodies to access capital markets and explore alternative ways to finance infrastructure projects.

For the BMC, green municipal bonds could provide an opportunity to raise funds specifically for eligible environmental and water-related infrastructure projects while broadening its funding options.

BMC Reviews Available Funds Amid Rising Financial Commitments

Although the BMC holds substantial financial reserves, a significant portion of its deposits is already committed to existing obligations.

The civic body has fixed deposits worth approximately ₹77,905 crore. However, nearly 51% of these deposits are earmarked for internal liabilities, including pension and gratuity payments, provident fund contributions, and refundable deposits held for contractors.

After accounting for these commitments, around ₹39,731 crore remains available. This amount is limited compared with the estimated cost of the BMC's major infrastructure projects, which is nearly four times the available funds.

The financial pressure has encouraged the civic body to explore additional funding sources to support its development plans without relying entirely on existing reserves.

Green Bonds Could Strengthen Mumbai’s Long-Term Infrastructure Funding

The proposed ₹5,000 crore to ₹10,000 crore green bond issue represents an important step in the BMC's efforts to diversify its financing strategy. By accessing the municipal bond market, the civic body aims to secure funds for water supply improvements, wastewater treatment facilities, and other essential infrastructure.

The success of the proposed issue will depend on the completion of the required preparations, including the appointment of a debenture trustee and the necessary arrangements for the bond issuance.

If implemented, the fundraising plan could help the BMC advance key infrastructure projects while managing its financial commitments and addressing Mumbai's long-term water needs.