March 21, 2023
  • 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.
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