ASSOCHAM urges RBI for creating municipal bond market

ASSOCHAM urges RBI for creating municipal bond market
The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has emphasised the need for creating a framework for developing a liquid municipal bond market in India on the lines of US, Canada, South Africa, Russia, Hungary, Brazil etc with a view to fund the urban infrastructure.

In a Note submitted to the RBI, the chamber has stated that as pace of urbanisation gathers momentum and new cities are created as a consequence of industrial corridors, need for creating such municipal bond market will be of necessity.

The chamber president Rana Kapoor said, India will need to invest $835 billion to meet its urban infrastructure requirement between 2013 and 2031.

He said that municipal bonds have advantages in terms of the size of borrowing and the maturity period of 10-20 years both of which are considered to be ideal for urban infrastructure financing.

A municipal bond is a bond issued by a local government or their agencies potential issuers of such bonds include states, cities, countries, redevelopment agencies, special purpose districts, school districts, public owned airports and seaports and any other governmental entity at or below the state level Municipal bonds may be general obligations of the issuers or secured by specified revenues.

Dion Global Solutions Ltd.

Story first published: Monday, November 11, 2013, 9:21 [IST]
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