22 Urban local bodies raised over Rs 4,500 crore via municipal bonds till FY26: SEBI Chief
Bhubaneswar, May 18
Highlighting the increasing importance of municipal bonds as a key source of financing for urban infrastructure and development projects across the country, SEBI Chairman Tuhin Kanta Pandey noted that across India 22 Urban Local Bodies have collectively raised more than Rs 4,500 crore through municipal bonds till FY26.
Speaking at the Association of Mutual Funds Program in Bhubaneshwar, Odisha, Pandey said the securities market serves as an efficient tool for directing savings into investments alongside banks, government support and internal accruals.
He highlighted that the capital market has diversified financing avenues through instruments such as equity, debt, REITs, InvITs and municipal bonds.
Referring to states such as Uttar Pradesh, Maharashtra and Madhya Pradesh, which have successfully leveraged municipal bonds for city-level infrastructure and urban development, Pandey said Odisha could also position municipal bonds as a key pillar of its development financing strategy.
"With wider participation, municipal bonds can evolve into a key pillar of funding for urban infrastructure in Odisha as well. So as an investor, when you invest, you are not just earning returns. You are participating in the growth of your city when you are investing in municipal bonds, state and the country," Pandey said.
He further noted that mutual funds also indirectly contribute to infrastructure financing through investments in debt instruments, including corporate and municipal bonds.
The SEBI Chairman said that while the domestic municipal bond market remains nascent, 22 urban local bodies across the country had collectively raised more than Rs 4,500 crore through 31 issuances by the end of FY26.
Highlighting the broader growth of the domestic securities market, Pandey said total market capitalization surged from Rs 95 lakh crore in FY16 to around Rs 463 lakh crore in April 2026. He added that the number of unique retail investors increased to 145 million from 38 million in FY19.
According to Pandey, the primary market recorded 366 initial public offerings during the last financial year, raising Rs 1.9 lakh crore and ranking first globally in terms of number of IPOs. Total equity and debt market mobilization stood at Rs 13.6 lakh crore despite geopolitical tensions and global conflicts.
He also said mutual fund assets under management grew from Rs 12 lakh crore in FY16 to nearly Rs 82 lakh crore by the end of April 2026, while monthly SIP inflows crossed Rs 31,000 crore in April 2026 compared to nearly Rs 3,000 crore earlier.
However, citing the SEBI Investor Survey 2025, Pandey said that although 63 per cent of households were aware of market-linked products, only 9.5 per cent invested in them, with urban participation at 15 per cent and rural participation at 6 per cent.
"A securities market is nothing but a bridge between savings and investments. On one side we have individuals like all of us who save money. On the other side we have businesses who need capital to grow. The market connects the two," Pandey said.
— ANI
Reader Comments
Interesting development but I have reservations. Municipal corporations in India have a very poor track record of financial management. Before we trust them with bond money, we need stronger oversight and credit ratings. Otherwise it's just another way to burden citizens with debt while the actual infrastructure remains subpar.
As someone who works in finance, I can see the potential here. Municipal bonds are a tested model globally for funding local projects. The fact that 22 ULBs have already raised this amount shows growing investor confidence. But the SEBI chief is right—we need wider participation. This could be a game-changer for urban India if done right.
Bhubaneswar mein ye sab kuch ho raha hai aur humari city ki sadkein abhi bhi kachchi hain! 😅 On a serious note, I'm happy to see SEBI pushing for this. The jump from 38 million to 145 million retail investors is amazing—people are finally understanding that markets are for long-term wealth creation. Municipal bonds with good yields could attract even more.
The data on retail investors is impressive—14.5 crore unique investors is no small feat. I've been investing in mutual funds for years and it's good to see SIPs crossing Rs 31,000 crore monthly. However, I'm skeptical about municipal bonds being attractive for retail investors unless the returns are competitive with other fixed-income options.
I wish the article mentioned which specific cities have benefited from these bonds. As a resident of a tier-2 city, I can see the need for better urban infrastructure. But the 9.5% investment
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.