Municipalities having a surplus in their books in any of the three immediately preceding financial years will be eligible to issue bonds, with the Sebi deciding to amend norms in this regard.
The eligibility would also be decided by financial criteria specified by Sebi from time to time. To boost the market for municipal bonds, also known as muni bonds, Sebi board approved on Saturday changes to the relevant regulations in order to provide a criteria that is alternative to 'net worth' of the municipalities.
After its board meeting in Jaipur, Sebi said municipalities making public issue of debt securities should have "surplus as per its Income and Expenditure Statement, in any of the three immediately preceding financial years or any other financial criteria as specified by Sebi from time to time".
Under the Sebi (Issue and listing of Debt Securities by Municipalities) Regulations, 2015 (ILDM), a municipality or a Corporate Municipal Entity (CME) making public issue of debt securities should not have negative net worth in any of three immediately preceding financial years. Stating that he is "disappointed that even now we do not have a municipal bond market," Modi had urged Sebi and the finance ministry to ensure that at least 10 cities issue municipal bonds within one year.