The ministry of Urban Development has issued guidelines for the proposed credit ratings for Urban Local Bodies (ULBs) under the AMRUT and Smart Cities Mission.
As per a release issued by the government, the credit rating of the ULBs is one of the key reform under the AMRUT mission (Atal Mission for Rejuvenation and Urban Transformation). As per the guidelines, the AMRUT cities will complete the credit ratings within 18 months of the launch of the mission.
The ratings are key to evaluate the credit worthiness of any particular ULB for raising additional resources from the market, based on its sustainable revenue stream to fund the Special Purpose Vehicle (SPV).
Based on the approach for credit ratings the focus will be on the following:-
- Undertaking credit worthiness and rating of the ULBs using establish methodology in order to provide pointers to potential lenders.
- Highlighting overall performance of the ULBs in both financial and non-financial aspects.
- Identification of areas of strengths and weakness of the ULBs in management of finances for a road map for Credit Enhancement Plan .
- Assessment of the 'Borrowing Capacity' of the ULB in the "Base Case Scenario" as well as the "Financial Improvement Action Plan" is implemented.
States/ ULBs may procure a Credit Rating Agency by issuing RFP to the accredited Credit Rating agencies for financial bid. The funding for the same will be done by the World Bank through capacity building for Urban Development project.