SEBI launches Information Database on municipal bonds

SEBI is the Security and Exchange Board of India. It is a regulatory body that was established under the SEBI Act of 1992. To develop the bond markets, SEBI recently introduced a database and a repository for municipal bonds. Today the municipalities in India are focusing to increase revenue-generating assets and green projects. The SEBI-launched repository and database will aid the municipalities to achieve their objectives. Also, it will aid the municipalities in addressing their major concerns such as lack of investors, absence of regulatory frameworks, and slow-growing markets.

What are Municipal Bonds?

It is a debt security. In general, it shall be issued by the central government, state government, municipalities, etc. But in India, the local government issues these bonds. These bonds aid the entities to finance their development projects such as building schools, hospitals, and other infrastructure. There are two types of Municipal bonds. They are General Obligation bonds and Investor assistance bonds.

General Obligation Bonds

They are not backed by the revenue generated by a project. For instance, there are some government bonds that are backed by property taxes. Meaning, if the owner of a property is paying tax for his asset, the value of his bond increases.

Revenue Municipal Bonds

These bonds secure the interest earned from fuel, sales, and other taxes. Meaning is backed by the revenue generated by the assets.

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