SEBI urges NaBFID to fund municipal bodies to aid credit-worthiness
This story was originally published at 18:26 IST on 12 September 2024
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MUMBAI – In a bid to promote municipal bond issuances by raising the credit-worthiness of municipal bodies, Securities and Exchange Board of India Executive Director Pramod Rao today urged the National Bank for Financing Infrastructure and Development to provide finances to over 5,000 municipal corporations and local bodies in the country.
Speaking at an infrastructure conclave held by the National Bank for Financing Infrastructure and Development here, Rao said that even though the regulatory norms provide safeguards such as debt reserve accounting and getting merchant bankers to ensure disclosure of the latest financials, many municipal bodies which have tapped the securities market have got rated only at the lower end of investment grade and not above.
The SEBI is the apex regulatory body for the securities market and is keen on growing debt securities issuances by municipal corporations.
The executive director also said the market regulator will support the infrastructure financing bank and the Reserve Bank of India if they consider spurring securitisation of the infrastructure lending book.
He said though the National Bank for Financing Infrastructure and Development is keen on improving liquidity in infrastructure lending through the use of market makers, SEBI's experience in corporate bond issuances suggests that secondary market liquidity in these securities is restricted as investors are holding the instruments till maturity.
To expect infrastructure bonds to trade in secondary markets with a liquidity matching that of the equity market may be expecting too much, Rao said. End
Reported by Rajesh Gajra
Edited by Saji George Titus
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