kerala aspirant

IN the light to develop 100 smart cities government initiated muncipal bond with permission of SEBI and by following to identify 5 ; 6 cities as a initai phase

Municipal bonds are instruments issued by municipal bodies or by states. to raise capital for infrastructure projects.by issuing of bonds govt is expected to gain fast money.still clarity about gurantee of bonds is not clear it will ease the process

A bond issuer (the municipality) sells the bond to thebond holder (the investor). The bond holder lends the issuer a fixed amount of money for a certain amount of time in exchange for regularly scheduled interest payments.with the amount of investor increasing it is better for both

naruto

municipal bonds are bonds issued by municipal bodies r the state on behalf of such bodies to rise funds for infrastructural projects in that city.with the aim of government to develop 100 smart cities there is urgent need of infrastructural investments.The private players being more interested in major cities instead of local cities and government trying to manage its fiscal deficit,public savings can be a good source of finance for these projects.

Manish

Municipal bonds, also called Muni bonds are instruments issued by municipal bodies, or by states on behalf of municipal bodies, to raise capital for infrastructure funds. Muni bonds are very popular in developed nations as preferred investment avenues by household investors.

To help in the govt’s smart cities programme the SEBI proposed a new set of norms of listing and trading these bonds on stock exchanges. Conservative Indian investors, who mainly invests in FDs, gold or small saving schemes, can

expect good returns, with less risk, if they opt to invest in these bonds and this may further accelerate the capital markets. Institutional investors such as provident funds, pension funds and insurance companies can also

put in their money.

Now govt is identifying 5 or 6 cities and specific infrastructure projects in those cities, for which those civic bodies could issue such bonds. And thus these bonds can help earn investors good returns, with low risks, on their investment and also help civic bodies to get the necessary funds for infrastructure projects.

ram

In the context to develop 100 smart cities,government is trying various ways to finance the infrastructure for such cities.therefore decided to revive municipal bond.

Municipal bonds market existed since 1998 and Ahmedabad became 1st to issue it.

municipal bonds are instruments issued by municipal bodies, or by states on these bodies behalf, to raise capital for infrastructure projects.

Urban development minister has been asked to identify specific projects in 5 or 6 cities for which municipal bonds will be issued.

market of municipal bonds has not picked up in india because of lack of interest among investors,poor state of finance of municipal bodies,bureaucratic hurdles,local political interference with civic bodies.

these bonds should be made more attractive so that more money is raised is used for development purpose.

www.sevottam.wordpress.com/ Shaina Singh

Municipal bonds or globally known as munis are globally popular tax saving fixed income security. This instrument is used in developed countries especially in US to raise money by municipality for local development. Tax saving status has given it popularity among fixed income investors like Pension funds.

India is contemplating to allow its municipality to issue munis to raise money to fulfill the dream of 100 smart cities as underlined by govt. Since making of smart cities and upgrading of current dilapidated infrastructure would require extensive amount of money this fund requirement could be fulfilled by munis.

However there are many impediments in realizing the dream

1. Dilapidated finances of ULBs with little financial resources to raise revenues would make munis unviable

2. RBI regulation of limiting munis interest to 8% also limits interests as there are other instruments like bank deposits offering better returns

3. Lack of techno-managerial capability of municipalities in handling funds or citys resources

Hence allowing munis to raise funds for development is welcome but it needs structural reforms in ULB, financial architecture to make it possible and viable.

PS: Please review my civil services main examination attempts at sevottam(dot)wordpress(dot)com