RBI prods Indian civic bodies to issue municipal bonds for funding

India’s local city governments must consider issuing municipal bonds to meet their funding requirements as the demand to ramp-up infrastructure in the Asia’s third-largest economy grows, according to the nation’s central bank.

The challenge for these civic bodies, many of whom are financially weak, is to ease the resource crunch, the Reserve Bank of India said in its first report on municipal finances. “A vibrant sub-sovereign debt market catering to a robust investor appetite for municipal bonds can provide an avenue for these entities to access public funds.”

Local bodies in India are among the weakest globally as they don’t have