MUMBAI: Capital markets regulator Sebi’s executive director Pramod Rao on Friday urged pension funds and insurers to support municipal bonds by subscribing more to such papers.

He said the size of the municipal bond market is much smaller when compared to the US, where the overall municipal bond outstanding is $4 trillion, or the size of the Indian economy, and the annual issuances exceed $300 billion.

“Our municipal bonds are quite small compared to what we witness in the US... I would urge pension funds and insurers to look at increasing support to municipal bond issuances,” he said, speaking at an event organised by Assocham here. Few civic bodies have used the route to raise long-term resources for funding, even as policymakers have been trying hard to increase their usage. Rao expressed satisfaction with the activity in the corporate bond repo market, saying it stands at over Rs 10,000 crore a month and will increase to over Rs 18,000 crore a month in two months.

He also urged the bond market to come up with newer, innovative ways to tap into the available opportunity so as to increase the activity in the market. Citing the example of mutual fund body Amfi’s campaign aimed at popularising mutual funds, he said the bond market can also create a similar campaign which will help the sector gain traction and end up aiding economic growth through capital formation.

He also said there is a need for market participants who actually trade to use the request for quote platform, and added that the regulator is considering to allow more thematic bonds issuances on the lines of social and sustainability bonds.