India’s finance ministry issued a notification specifying that municipal debt securities are recognized for repo and reverse repo under the Reserve Bank of India (RBI) framework, reports Taxmann.
Implications for market participants are: banks and financial Institutions can now use municipal debt securities for short-term borrowing and lending with the RBI, enhancing liquidity management; municipal Corporations benefit from improved marketability of their debt securities, potentially lowering borrowing costs; and investors can gain confidence in the credibility and acceptability of these securities as they are recognized under the RBI framework.