What is the Nifty India Municipal bond index?

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About Nifty India Municipal bond index :

It is India’s first-ever municipal bond index.
It was launched by NSE Indices Ltd, the subsidiary of India’s National Stock Exchange (NSE).
The index tracks the performance of municipal bonds issued by Indian municipal corporations across maturities and has investment-grade credit ratings.
The index includes municipal bonds issued as per the Securities Exchange Board of India Issue and Listing of Municipal Debt Securities Regulations, 2015.
Presently, the index has 28 municipal bonds issued by 10 issuers, all having credit ratings in the AA category.
The index constituents are assigned weights based on their outstanding amount.
The index is computed using the total return methodology, including price and coupon returns.
The index has a base date of January 01, 2021, and a base value of 1000.
The index will be reviewed quarterly.
It will act as a benchmark for passive funds, providing more investment choices to fixed-income investors and creating an impetus for asset managers to consider investing in such bonds

Q1) What is a Municipal Bond?

A municipal bond or muni bond is a debt instrument issued by municipal corporations or associated bodies in India. These local governmental bodies utilise the funds raised through these bonds to finance projects for socio-economic development.

Source: NSE unit launches first Municipal Bond Index