Make Money

What are Municipal Bonds, what benefits the common man?

Agency:News 18 Handy

Last update:

Municipal bonds help local governments raise funds for infrastructure development. Investors get tax-free interest. The first bond in India was issued by Bengaluru in 1997. Recently Prayagraj, WA…Read more

What are municipal bonds, what are the benefits to the common man?

3 districts of recently issued municipal bonds.

Highlights

  • Local governments raise funds from municipal bonds.
  • The first municipal bond in India was issued in 1997.
  • Investors receive tax-free interest on municipal bonds.

New Delhi. The history of municipal bonds in India begins in 1997, when the Bangalore Municipal Corporation issued the first municipal bond. After that, cities like Ahmedabad and Nashik also moved in this direction. The primary purpose of municipal bonds is for local governments to raise financial resources for public projects. Recently, Uttar Pradesh’s Priyagurj, Varanasi and Agra Municipal Corporations issued bonds worth Rs 150 crore.

Municipal bonds help local governments raise funds needed for infrastructure development. They are used for projects like schools, hospitals, roads and water supply. Investors receive regular income from these bonds in the form of interest (coupons), which are usually tax-free.

Also Read- Adani Energy’s revenue and profit both rise, yet shares don’t close

Kind of
Municipal bonds in India are mainly divided into two types:
General Obligation Bonds: These are issued by local governments and paid from general tax revenue.
Revenue Bonds: These depend on the revenue generated from special projects.

Benefits for investors
Tax-Free Interest: Interest on most municipal bonds is tax-free.
Low risk: Their default risk is lower than corporate bonds.
Transparency: They are rated by agencies like CRISIL, which helps investors make decisions.

Challenges
However, municipal bonds provide many benefits, but there are some challenges
Investor Confidence: Weak financial position of civic agencies and lack of management have affected investor confidence.
Non-availability of authentic financial data: Doubt on local institutions has dampened investor interest.

Home business

What are municipal bonds, what are the benefits to the common man?

.
#Municipal #Bonds #benefits #common #man

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *