Sebi launches information database on municipal bonds

The Securities and Exchange Board of India (Sebi) has launched an information database including a repository of information pertaining to municipal bonds on its website to assist municipal debt issuers and other stakeholders in the municipal debt market.

The information database will also be accessible by using a QR Code. Users will gain access to a wide range of information in the form of statistics and regulations, circulars, guidance note, and FAQs issued by Sebi concerning municipal debt securities. The repository also contains various checklists for pre-listing requirements and sample letters and certificates from various intermediaries to be obtained by an issuer who plans to tap the municipal bond market; templates for agreements between various stakeholders and an indicative due diligence questionnaire for merchant bankers are also included. “While this repository would serve as a guide, it is also hoped that it would result in more awareness,” Sebi said in a release.

The market regulator introduced a regulatory framework for the issue, listing and trading of municipal debt securities in 2015. It was reviewed again by Sebi in 2019.

Also read: Listing municipal bonds can pave way for developing secondary market: RBI

Ashwani Bhatia, whole-time member, Sebi, launched the database at a two-day outreach programme on municipal bonds and municipal finance organised by the market regulator on January 20 and 21, 2023, in New Delhi.

This is part of Sebi’s initiative to develop the bond markets and provide a common platform for stakeholders to discuss the concerns of the issuers of municipal debt securities, requirements of investors, extant regulatory framework, and to recommend measures to increase awareness of and improve traction in the market for municipal debt securities.

The event saw participants representing all stakeholders including the Ministry of Housing and Urban Affairs, municipal corporations, stock exchanges, credit rating agencies, merchant bankers, debenture trustees, lawyers, NGOs, and institutional investors.

Also read: MC Explains | Indian municipalities and their finances

Madhabi Puri Buch, Chairperson, Sebi, delivered the keynote speech at the event, emphasising the potential of municipal bonds in infrastructure development and nation-building.

Thara D, Additional Secretary, MOHUA, told municipalities that the government will support municipal corporations that desire to raise funds through municipal bonds.

Municipal bonds are an alternative source of finance to fund projects undertaken by municipal corporations. In India, the municipal debt market is in a nascent stage and Sebi is taking steps to increase awareness by holding such events.

Since 2017, as many as 12 issues of municipal bonds have been made by 10 municipal corporations, raising almost Rs 2,000 crore. The funds raised have been used for various developmental projects like liquid waste management projects, water supply projects, tertiary sewage treatment plants and residential projects.