In order to effectively carry out their mandates, both urban and rural local bodies require funding. States are required to set up a State Finance Commission once every five years to review the financial position of local government institutions and to make recommendations to the state governments, in order to ensure that local bodies have adequate financial resources to function. Broadly, local bodies have two main sources of revenue: internal and external. Internal (or own-source revenue) is that which they raise themselves, either through taxes such as land or property tax, or through non-tax sources which include rents and user-fees. External revenue sources include: - Assigned revenue, which covers taxes, duties, tolls, and fees due to local bodies, that are collected by the state and central governments. The exact percentage allocation of these revenues is done through recommendations of State Finance Commissions. - Grants-in-aid and loans from the central and state governments, domestic institutions, financial intermediaries, capital markets, and/or donor agencies. Due to the differing nature of functions performed, the exact sources of revenue vary for rural and urban local bodies. For example, large urban centres such as Delhi and Mumbai are able to mobilise newer and more innovative forms of finance such as private finance, while smaller municipalities and rural bodies continue to depend on traditional sources such as central and state government tax shares, loans, and grants.