SEBI’s push for Municipal bonds to help fund-starved civic bodies

Sebi_building-PTI_1-Mumbai: The Securities and Exchange Board of India (Sebi) has urged pension funds and insurers to support municipal bond issuances to help develop this nascent market so that fund-starved civic bodies can be helped.

“I urge pension funds and insurance companies and others to look at increasingly supporting municipal bond issuances,” said Pramod Rao, executive director at the markets watchdog, while speaking at an Assocham-organised corporate bond market summit here on Friday.

Municipal bonds are debt instruments like a non-convertible debenture (NCD) or any other debt instrument, issued by municipal corporations with the permission of the respective state governments.

As of March 2024, municipalities across India have collectively raised Rs 1,940 crores from 12 issues and the total outstanding was only Rs 2,184 crore. As against this, the US municipal bonds market is worth $4 trillion.

However, the total outstanding corporate bonds as of now in India are worth Rs 47.29 trillion, while that of Central government bonds are worth Rs 100.7 trillion. There is no cumulative data available on the outstanding amount of state government bonds.