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Sebi approves norms for issuance and listing of muni bonds

To help in the government’s ‘smart cities’ programme, Sebi on Sunday approved a new set of norms for listing and trading of municipal bonds on stock exchanges, while channelizing household investments for urban infrastructure development.

After approving the regulations for such municipal bonds, also known as ‘muni bonds’, Sebi Chairman U K Sinha said this would allow authorities to raise funds including for setting up of smart cities, by raising funds from the public and from the institutional investors.

These municipal authorities would need to have a strong financial track record and such bonds would be listed on the stock exchanges, Sinha said after a meeting of Sebi’s board that earlier was addressed by Finance Minister Arun Jaitley.

Conservative Indian investors mostly invest in fixed deposits, small saving schemes or gold. Bonds issued by municipalities having good financial track record would be another alternative investment opportunity for them.

Such bonds would provide reasonable return with less risk, which in turn may accelerate the capital markets.

Commonly known as ‘muni bonds’, these investment products are very popular among investors in many developed nations, especially the United States, where muni bonds have attracted investments totalling over USD 500 billion and are among preferred avenues for household savings.

While such bonds have been issued by various municipal authorities in the country, the total funds raised through them stand at only about Rs 1,353 crore.

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