A municipal bond is a debt instrument issued by municipal corporations under municipal laws with the permission of the respective state governments. The funds raised are then utilised to finance projects for socio-economic development. Corporations provide returns on these bonds through taxes collected from property or professional, or from revenues generated from specific projects. Going by Sebi guidelines for these bonds, the municipal body issuing them should have a good credit record and the bonds should have a rating above investment grade. As per the RBI's report on Municipal Finances, the issuance of municipal bonds was highest in 2018 at Rs 2,710 crore since 1997.