Solution

The Reserve Bank of India’s study on the theme - Alternative Sources of Financing for Municipal Corporations’ showed that the municipal corporations (MC) in the country need to explore different innovative bond and land based financing mechanisms to augment their resources. MCs need to adopt sound and transparent accounting practices with proper monitoring and documentation of various receipt and expenditure items. MCs’ committed expenditure in the form of establishment expenses, administrative costs and interest and finance charges is rising, but capital expenditure is minimal. MCs mostly rely on borrowings from banks and financial institutions and loans from Centre and State governments to finance their resource gaps in the absence of a well-developed market for municipal bonds. RBI Headquarters: Mumbai Governor: Shaktikanta Das Deputy Governors: MK Jain, MD Patra, M Rajeshwar Rao and T. Rabi Sankar Municipal Corporations- A city, town, village, or county that has been incorporated by a state and is authorized to administer local, governmental affairs, e.g., to establish a police force. A municipal corporation is created by a state's legislature which also controls, inter alia, its duration, rights, and powers.