After introducing credit ratings for Municipal Corporations, the government now has come up with the idea of Municipal Bonds. Although the concept is quite prevalent in various countries, in India it is yet to catch up.
To give a further stimulus to this idea, Stock Exchange Board of India has come up with guidelines for issuance of Municipal Bonds. This would give greater clarity for regulatory structure for these bonds. It will also pave way for better accounting practices in local government bodies.
This would mean well for initiatives like smart cities as funds garnered would be further used for urban development. Currently a number of funds are stuck due to funding issues. But all this depends on local bodies adopting transparent accounting systems which will attract investors to its bonds. Pricing of these bonds is also crucial but these are expected to have favorable response especially from government agencies.