{"id":2562,"date":"2023-02-02T04:20:34","date_gmt":"2023-02-01T22:50:34","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=2562"},"modified":"2025-03-25T22:33:44","modified_gmt":"2025-03-25T17:03:44","slug":"what-are-municipal-bonds","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/what-are-municipal-bonds\/","title":{"rendered":"What are Municipal Bonds?"},"content":{"rendered":"<h2>About Municipal Bonds:<\/h2>\n<ul>\n<li><strong>What is it?<\/strong> A municipal bond or muni bond is a <strong>debt instrument issued by municipal corporations <\/strong>or associated bodies in India.\u00a0<\/li>\n<li><strong>Purpose<\/strong>: The funds raised are used to <strong>finance socio-economic development projects<\/strong>.<\/li>\n<li><strong>History<\/strong>: It was <strong>first issued in the 1997 by Bangalore local bod<\/strong>y for infrastructure development projects 4 years after decentralization of powers and authorities to the Municipal bodies by the 74th constitutional amendment.<\/li>\n<li><strong>Tax Exemption<\/strong>: Municipal bonds are <strong>exempted from tax<\/strong> provided the buyer adheres to the rules laid by the municipal corporations. <strong>The interest is also exempted from taxes<\/strong>.<\/li>\n<li><strong>Securities and Exchange Board of India (SEBI) Guidelines :<\/strong><\/li>\n<li>The municipal body should not have a history of defaulting at repayments of loans or debt instruments acquired from financial institutions in the past year.<\/li>\n<li>It should possess a positive net worth in all the three years preceding the issuance of municipal bonds.\u00a0<\/li>\n<li>Such municipal entity, its Group Company or directors, and promoters shall not be mentioned in the willful defaulters\u2019 list published by the Reserve Bank of India.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h3>What is a bond?<\/h3>\n<ul>\n<li>It is a <strong>debt security.<\/strong><\/li>\n<li>Borrowers issue bonds to <strong>raise money from investors<\/strong> willing to lend them money for a certain amount of time.<\/li>\n<li><strong>When you buy a bond, you are lending to the issuer<\/strong>, which may be a government, municipality, or corporation.<\/li>\n<li>In return, the <strong>issuer promises to pay you a specified rate of interest<\/strong> during the life of the bond <strong>and to repay the principal.<\/strong><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<hr \/>\n<h3>Q1)\u00a0What is the difference between a debt security and equity security?<\/h3>\n<p>Equity securities represent a claim on the earnings and assets of a corporation, while debt securities are investments in debt instruments. For example, a stock is an equity security, while a bond is a debt security.<\/p>\n<p><strong>Source:\u00a0<\/strong><a href=\"https:\/\/www.newindianexpress.com\/cities\/bengaluru\/2023\/feb\/02\/budget-bbmp-official-hails-municipal-bonds-expert-has-doubts-2543547.html\" target=\"_blank\" rel=\"nofollow noopener\"><u>Budget: BBMP official hails municipal bonds, expert has doubts<\/u><\/a><br \/>\n\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A municipal bond is a debt instrument issued by municipal corporations or associated bodies in India.<\/p>\n","protected":false},"author":5,"featured_media":2563,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-2562","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/2562","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=2562"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/2562\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/2563"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=2562"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=2562"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=2562"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}