Sebi notifies norms for issuance and listing of municipal bonds
To help the government's 'smart cities' programme, capital markets regulator Sebi today notified new norms for listing and trading of municipal bonds on stock exchanges.
To help the government's 'smart cities' programme, capital markets regulator Sebi today notified new norms for listing and trading of municipal bonds on stock exchanges.
The move would allow authorities to mop-up funds, including for setting up smart cities, by raising money from the public and institutional investors.
Under the new norms, the municipal authorities would need to have a strong financial track record and such bonds would be listed on stock exchanges.
Conservative Indian investors mostly invest in fixed deposits, small saving schemes or gold.
Now, bonds issued by municipalities having good financial track record would be another alternative investment opportunity for them. Such bonds would provide reasonable return with less risk, which in turn may accelerate the capital markets.
Commonly known as 'muni bonds', these investment products are very popular among investors in many developed nations, especially the United States, where muni bonds have attracted investments totalling over USD 500 billion and are among preferred avenues for household savings.
For issuing debt securities to public under the regulations, municipalities need not have negative net worth in any of the three immediately preceding financial years.
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