Close to a dozen Indian cities are set to issue municipal bonds for the first time this year, according to three merchant bankers, as a regulatory and fiscal push boosts a fledgling market.
Authorities have long sought to push municipal bonds that are typically used to finance urban projects ranging from transportation to sanitation in the world's most populous country that is rapidly urbanising.
Investors are also gradually taking greater interest in the market that was once plagued by concerns over opaque finances.
Over the past two years, regulators have pushed for regular financial updates while the government has offered fiscal incentives, boosting activity.
At least seven municipal bodies in the western Indian state of Maharashtra are prepping issues worth at least ₹3,300 crore rupees ($340.8 million), according to the merchant bankers, who declined to be named as they are not authorised to speak to media.
The cities include several that encircle the financial capital Mumbai: Navi Mumbai, Panvel, Thane, Kalyan-Dombivli and Mira-Bhayandar.
The Municipal Corporation of Greater Mumbai, the nation's richest local body, has yet to tap the bond market.
Ohers looking to sell bonds this year include Chhatrapati Sambhaji Nagar and Nagpur in Maharashtra, Ujjain in central India, and Shimla, Moradabad and Gorakhpur in north India.
None of the city corporations responded to Reuters' emails seeking comments.
"Overall, at least seven to 10 new issuers are likely to hit the market in fiscal 2026-27, with a bond issuance pipeline of at least ₹4000 crore already in place across public and private placements," said Umesh Khandelwal, chief business officer at Tipsons Group, which acts as an arranger for sales.
So far, 22 cities from seven states in India have raised around ₹4500 crore through bonds over the last nine years, regulatory data shows.
India's markets regulator plans to allow municipal bonds to be issued for refinancing of loans and has permitted cities to offer higher interest rates to senior citizens, women and retail investors.
Finance Minister Nirmala Sitharaman had announced an incentive of ₹100 crore for corporations issuing bonds worth at least ₹1000 crore rupees.
The government also provides a subsidy for maiden bond issues as well as a 2 percentage point interest support that makes such borrowing cheaper.
Major investors in municipal bonds include the National Bank for Financing Infrastructure and Development, banks and state finance corporations, bankers said. NaBFID was the anchor investor in some issues last fiscal.
Published on May 20, 2026