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NHB Operationalizes ₹10,000-Crore Urban Infrastructure Development Fund

The National Housing Bank (NHB) has announced the operationalization of the ₹10,000-crore Urban Infrastructure Development Fund (UIDF), as outlined in this year’s Budget. The fund aims to facilitate the creation of urban infrastructure in tier-2 and tier-3 cities, supplementing the efforts of state governments.

Key Points:

Objective and Scope:

    • The UIDF, managed by NHB, provides a stable and predictable source of finance for urban infrastructure development.
    • The fund targets 459 tier-2 cities and 580 tier-3 cities based on the 2011 census population data.

Loan Details:

    • The initial corpus of the fund is ₹10,000 crore.
    • Interest rate on UIDF loans is set at bank rate minus 1.5 percent (currently 5.25 percent).
    • The principal loan amount is repayable in five equal annual installments within seven years, including a two-year moratorium period.
    • Interest on the loan is payable quarterly.

Eligible Projects:

    • Focus areas include basic services such as sewerage and solid waste management, water supply and sanitation, and construction and improvement of drains.
    • Priority is given to impact-oriented projects.
    • Project proposals must fall within a minimum size of ₹5 crores (₹1 crore for northeast and hilly states) and a maximum size of ₹100 crore.

Activities Covered:

    • Water supply network (new/augmentation/rehabilitation)
    • Construction and improvement of drains/storm water drains
    • Sewerage network (new/augmentation/rehabilitation)
    • Sewage treatment plants – secondary/tertiary treatment
    • Comprehensive projects of pay and use toilets operated and managed by the private sector
    • Solid Waste Processing Plants (new/augmentation)
    • Land reclamation from legacy dumpsite remediation
    • Roads (excluding maintenance works) within area development projects with provisions for underground utilities
    • Electric/gas crematorium
    • Transit-oriented development for creating dense, mixed-use developments near public transportation
    • Town planning schemes for greenfield development
    • Parks with open gyms not involving major construction work

Exclusions:

    • The fund cannot be used for maintenance works or administrative/establishment expenses.
    • Housing, power and telecom, rolling stock (buses and trams), urban transport, health, and education institutions are not covered by UIDF.

Accessing the Fund:

    • Both new and ongoing projects are eligible for UIDF.
    • Projects must align with various urban missions and programs of the Government of India.
    • States are encouraged to leverage resources from the grants of the 15th Finance Commission and existing schemes.
    • Appropriate user charges should be adopted while accessing the UIDF.

Fund Allocation:

    • The normative allocation for the first tranche of ₹10,000 crore under UIDF for 2023-24 has been advised by NHB to States and UTs.
    • Allocation is based on the urban population percentage in respective States/UTs in eligible towns/cities.

Implementation:

    • The Finance Department of States/UTs is designated as the nodal department for fund implementation.
    • NHB is operationalizing the fund through its regional offices across the country.

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