New Delhi: A total of 22 urban local bodies across India have collectively raised more than ₹4,500 crore through municipal bonds till FY26, according to Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey.
Speaking at a financial sector event in Bhubaneswar, the SEBI chief said that municipal bonds are gradually emerging as an important tool for funding urban infrastructure, though the market is still at a nascent stage. He added that the issuances were spread across 31 bond transactions, reflecting growing but limited participation from cities in capital market borrowing.
Officials noted that these funds have been primarily used to support urban development projects such as roads, water supply systems, sewage networks, and other civic infrastructure needs. The SEBI chief highlighted that cities need significantly higher investment in infrastructure due to rapid urbanisation, and municipal bonds can serve as a sustainable alternative to traditional funding sources like government grants and bank loans.
He also stressed that the securities market acts as a bridge between household savings and infrastructure financing, helping channel long-term capital into development projects. According to him, wider adoption of municipal bonds could help urban local bodies reduce dependency on state and central funding while improving financial discipline and transparency.
However, SEBI officials acknowledged that India’s municipal bond market remains relatively small compared to global benchmarks. Challenges such as weak municipal finances, limited creditworthiness, and low investor awareness continue to restrict broader participation, especially from retail investors.
To address these issues, SEBI has been introducing reforms aimed at improving disclosure standards, easing issuance norms, and encouraging pooled financing structures for smaller municipalities. These measures are expected to strengthen investor confidence and expand the municipal bond ecosystem in the coming years.
Despite the current limitations, officials said the growth from zero issuances a few years ago to 22 active issuing bodies marks a significant step forward in India’s urban financing landscape.
Overall, SEBI believes municipal bonds could become a key pillar of infrastructure funding as India’s cities continue to expand and require large-scale investment for sustainable development.
