Muni Bonds

  • IASbaba
  • December 4, 2020
  • 0
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Muni Bonds

Part of: GS Prelims and GS-III – Economy

In news

  • Bonds issued by the Lucknow Municipal Corporation (LMC) were listed on the BSE, raising Rs 200 crore for Uttar Pradesh’s capital.

Key takeaways

  • According to UP Chief Minister, Ghaziabad will be the next to issue a municipal issue and it will be followed by Pragyaraj, Varanasi, Agra and Kanpur.
  • Lucknow is the ninth city in the country to raise capital through municipal bonds.
  • Until now, a cumulative amount of Rs 3,600 crore has been raised via muni bonds in the country. 
  • The money raised using such bonds is typically used for infra projects such as roads, water and housing.
  • In 2015, market regulator SEBI had issued the framework for raising capital by way of muni bonds.
  • Among the key eligibility criteria for issuing these bonds is that the local body shouldn’t have negative net worth in any of the three preceding financial years and shouldn’t have defaulted on payments in the last one year.

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