To boost the market for municipal bonds, regulator Securities and Exchange Board of India (Sebi) has allowed municipalities having a surplus in their books in any of the three preceding financial years to issue such securities.
The move comes after Sebi's board last month approved changes to the relevant regulations in order to provide criteria that is alternative to 'net worth' of municipalities.
In a notification dated February 15, Sebi said municipalities making a 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.
Besides, Sebi said that municipality should not have defaulted in repayment of debt securities or loans obtained from banks or financial institutions during the last 365 days.