Securities and exchange board of India then came out with a regulation to propper up the Moribund Municipal Bond Market in July 2015
Municipal bonds, famously known as ‘Muni bonds’ are Issued by Urban Local Bodies (ULBS) and agencies when they want to Raise Funds for Infrastural Development in that Municipality. Bangalore, now known as Bengaluru, was the first to come out with muni bonds as early as 1997. After that, a couple of ulbs such as such as nashik and ahmedabad hit the bond After that, the muni bond market was brought in a state of lull.
Market Regulator Securities and Exchange Board of India (Sebi) then Came out with a regulation to Prop up the Moribund Municipal Bond Market in July 2015.
It has been 10 years Since SIBI Circulated Detailed Guidelines for the ulbs to Raise Funds through Municipal Bonds, but there has been little success Programmes Such as Amrut and the Smart Cities Mission by the Central and State Governments to Tone Up Infrastructure for Various Municipalities and Urgaing The Corporations to Go Public.
The US Treasury Department’s Office of Technical Assistant (OTA) Played a Catalytic Role By Joining Hands With the Ministry of House and Urban Affairs (Mohua) For making Fund-Raising Fund-RESY FONSY FORPORATIONS.
Amrut 2.0
Ota has strengthened the ecosystem under Amrut 2.0 where Ulbs can receive in increasingly up to ₹ 13 Crore ₹ 100 Crore, Capped at ₹ 26 Crore, for the first-time Issuans. For subsequent issues, the bond must qualify as a green bond (for sector thought as water, sanitation, renewable energy or urban resilience) and they would be eeligible for incentives of, Crore, Capped at ₹ 20 Crore.
Mohua has also extended this innocent to pooled municipal bonds, allowing smaller ulbs to agargregate their borrowing through state-level pooled finance entities.
Ibmx index
The nse indices, on its part, launched ibmx, or India Municipal bond index-First Municipal Bond Index in February 2023 That Tracks The Performance of High-CREDITY MUNICAPAL BONDS Using a total return methodology.
Green and esg-linked bonds have come into vogue as muni bonds of indore, ghaziabad and pimpri-chinchwad received overwhelming responses from the market. However, Vadodara Municipal Corporation (VMC) Stole The Limelight, AS Its ₹ 100-Crore Bond Issue in 2022 was oversubscribed 10 times, and with amrut innovation, the Effective COPON RATE DOWN TO 4.555 Cent, a big achievement.
VMC’s success
The success of vmc bond issue was mainly on account of its strong governance by adopting accrual-spoken accounting and timely audins, and ensuring that proceeds are used for use Projects. In Fact, to help guide others, VMC also recently published a detailed case study study booklet titled The green bookWhat Documents Their Entre Green Bond Issuance Journey – Challenges, Structuring Process, Stakeholder Coordination, and Lessons Learned.
There are Several Key Challenges, According to Rating Agency ICra that Continue to Affect the Municipal Bond Market. “These include ulbs’ high dependence on Government Grants, Lack of Adequate and Timely Financial Disclosures, Illiquidity, The Absense of a Secondary Market for Bonds, HIGH Compliance Requirements, and relatively weak credit quality of ulbs in accessing capital markets, ”ICRA said in the thematic report.
This vmc model services as a valuable input for other municipalities that are exploring muni bond issues.
“State Governments, Barring a Few, Are Yeet to Crystallise Asset Monetisation Plans to Provide a further boost to infrastructure creation.
Cash-Starved Municipalities Across India Should Look at the Muni Bonds Route More Seriously to Enhance Quality of Infrastructure of infrastructure of cities/towns where Monsoon Exposes them Quite Badly EVITE BADLY YEVERY Year Year.
Published on September 19, 2025