SEBI Launches Information Database On Municipal Bonds.

• Database contains a wide range of information in form of statistics and regulations, circulars etc. issued by SEBI and information to be obtained by an Issuer to tap Municipal Bond Market.
• A municipal bond is a debt instrument issued by municipal corporations.
  • Bengaluru floated municipal bonds for first time in India in 1997.
• Need for Municipal Bonds
  • Better urban infrastructure requires greater flow of financial resources to Local governments.
  • Reduce dependence of municipal corporations on central or state government.
  • Will enable adoption of innovative and appropriate technologies for waste treatment, tackling of air and water pollution etc.
• Constraints faced
  • Lack of a secondary market inhibits attracting a more extensive investor base.
  • Conditions imposed such as prescribed limits and maximum loan repayment period.
  • Poor accounting standards and low institutional capabilities.
• RBI in a recent report suggested several measures for resource mobilisation through municipal bonds such as:
  • Sound and efficient regulation, greater transparency, and better governance.
  • Listing municipal bonds in stock exchanges for developing a secondary market.

Types of Municipal Bonds

• General obligation bonds: for enhancing civic amenities such as water, sanitation, garbage disposal, etc.
• Revenue bonds: for a specific purpose such as construction of a toll road or a toll bridge.