Regulations
SEBI mulls norms for issuance, listing of ‘municipal bonds’

Municipal bonds serve as an efficient tool for local bodies to mop up funds and can be extensively tapped to meet funding needs of urbanisation, while providing a new investment avenue to public and institutional investors

 

Market regulator Securities and Exchange Board of India (SEBI) will soon come out with a new set of norms to enable issuance and listing of municipal bonds — a popular financial product in developed countries like the US. This move would help channelise household savings and provide a new investment avenue, the market regulator feels.
 
Under the proposed framework currently under consideration of SEBI, municipal bonds would be debt securities issued by states, cities and other government entities which will use the money for infrastructure developments like buildings, schools, highways, hospitals, sewage systems and other projects for the public good.
 
An internal SEBI panel, the Corporate Bonds and Securities Advisory Committee (CoBoSAC) had constituted a sub-committee for specifying the disclosure and other requirements for issuance and listing of municipal bonds.
 
The sub-committee has submitted its report to the CoBoSAC, whose recommendations would form the basis to draft norms for way ahead of these bonds and the final guidelines would be put in place after going through a public consultation process on the draft norms, a senior official said.
 
Commonly known as ‘muni bonds’, these investment products are very popular among investors in many developed nations, especially the US, where muni bonds have attracted investments totalling over $500 billion and are among preferred avenues for household savings.
 
These bonds can be issued by urban local bodies to finance infrastructure such as water supply and sanitation.
 
They serve as an efficient tool for local bodies to mop up funds and can be extensively tapped to meet funding needs of urbanisation, while providing a new investment avenue to the public and institutional investors.
 
The market for ‘muni bonds’ is yet to take off in India even though few municipalities here have offered such products in the past, while Ahmedabad Municipal Corporation in Gujarat was the first to launch such a bond way back in 1998.
 
While there is already an existing framework for issuance of muni bonds, including by the Ministry of Urban Development, there are no unified norms to bolster this nascent market.
 
The fresh push for muni bonds has come at a time when the regulators and the government are looking at ways to channelise household savings into the market to boost overall economic growth.
 
India’s savings rate stood at little over 30% of the GDP in 2012-13 fiscal while household savings rate was nearly 22% during the same period.
 
In India, muni bonds were issued for the first time by a municipality in Gujarat, the home state of Prime Minister Narendra Modi.
 
Way back in 1998, Ahmedabad Municipal Corporation had become the first municipality to come out with muni bonds.
 
Since then few others, including Greater Vishakhapatnam Municipal Corporation, had issued such bonds.
 
India would need more than $800 billion investments to cater to the urban infrastructure needs over two decades, as per industry chamber Assocham, and muni bonds can serve as an effective fund-raising instrument in this regard.
 
Besides the US, other countries with a developed muni bond market include Canada and Russia.

User

COMMENTS

webkitendfullscreen

3 years ago

The concept to fund urban infrastructure is good. But sadly this would be misused to fill pockets of muncipal councillors, officers. Even in USA urban authorities become bankrupt. Hope the extend of siphoning is controlled in case these bonds floated

SEBI finds 22 PSUs violating norms

A total of 17 companies were found to be non-compliant with the norms pertaining to the composition of the board of directors. These rules were related to minimum number of independent directors.

 

Market regulator Securities and Exchange Board of India (SEBI) has found 22 public sector companies including giants like Oil and Natural Gas Corp (ONGC), Coal India and Indian Oil Corp (IOC) to have violated various capital market guidelines. State Bank of India (SBI), the country's largest lender, however, filed for settlement of a case against it with the regulator, Parliament was informed Friday.

 

Rural Electrification Corp, ONGC, NHPC, NTPC, Neyveli Lignite Corp and Steel Authority of India (SAIL), are among the 17 PSUs found to have violated these board of directors norms by capital market regulator SEBI. Others include SAIL, ITDC, HMT, Shipping Corporation, NTPC, NHPC, STC, Nalco and EIL.

 

A total of 17 companies were found to be non-compliant with the norms pertaining to the composition of the board of directors. These rules were related to minimum number of independent directors.

 

SBI has filed for a consent application to settle adjudication proceedings against for alleged violations of debenture trustee norms.

 

It is alleged to have had outstanding loans with certain companies when it acted as debenture trustee for their issues.

 

The details of violations by these public sector units (PSUs) were submitted in a written reply by Minister of Finance Arun Jaitley to the Lok Sabha.

 

Other companies are Chennai Petroleum Corp, SJVN Ltd, Mangalore Refinery and Petrochemicals, Natural Fertilizers, National Aluminium Co, Engineers India, Shipping Corp of India, Container Corp of India and State Trading Corporation of India (STCI).

 

"SEBI in a letter dated 7 November 2014, informed the Ministries concerned about the non-compliance... SEBI also requested the Ministries concerned to expedite the appointment of independent directors in these 17 PSUs," Jaitley said.

 

Two state-run units -- Indian Tourism Development Corporation Ltd (ITDC) and HMT Ltd -- had failed to submit annual audited financial results within the prescribed time limit.

 

SEBI had rejected pleas from the companies for extension of time and were further advised to publish an announcement disclosing the reasons for the delay as well as indicate the timelines for announcement of the results, Lok Sabha was informed.

 

Other violations by PSUs include non-compliance of minimum public shareholding norms by Haryana Financial Corp. Accordingly, the company has been imposed with various restrictions from SEBI such as it cannot offer corporate benefits like bonus shares dividends to its non-public shareholders, till it achieves 10% public holding.

 

Public sector units Sicom Ltd and Dena Bank were found to have violated disclosure norms.

User

COMMENTS

Dipakkumar J Shah

3 years ago

Some bank at Branch level contravening the Direct in collusion with the Companies for making payment of Dividend , though the amount not credited to Dividend account and permits the Company to draw a cheque of dated before credit of amount to dividend account. It is State Bank of India Industrial Finance Branch Vadodara and Vijaya Bank Capital Market Branch Ashram Road Ahmedabad.. Not only this but in the case of Payment of Debenture Redemption by Jindal Iron and Steel Co Limited many years back collused wtih Vijaya Bank P D MEllow Branch and made the payment of debenture redemption 5 months and half month later!!! Even Reserve Bank of India do not bother !!! When complaint is lodged with Banking and Supervision Department. They say that I should go to SEBI!!!
Who is who can be judged from this statement.

SEBI bars 91 in Moryo Industries price rigging issue

SEBI said its probe found these entities involved in artificially inflating price of Moryo Industries' scrip to Rs225 from Rs93.4 during January 2013 and August 2014

 

Market regulator Securities and Exchange Board of India (SEBI) has barred 91 entities including Moryo Industries, its promoters Mohan Jain and Deepika Mohan Jain, four directors of the company and 84 other preferential allottees from markets.

SEBI said its probe found these entities involved in artificially inflating price of Moryo Industries' scrip to Rs225 from Rs93.4 during January 2013 and August 2014 in two patches. The ex-parte interim order comes into effect immediately pending detailed investigation.

 

Observing substantial trading among themselves by related entities in the Moryo scrip, SEBI analysed the trading frequency, volume generated, buying behaviour and contribution to the price rise. Inter-relationships were ascertained using KYC details, bank statements, off-market transactions among themselves and information available on the Ministry of Corporate Affairs website.

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Online Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine)