Urban Infrastructure Development Fund

03.12.2024

Urban Infrastructure Development Fund

Why in the news?   

         Recently, the Minister of State in the Ministry of Housing and Urban Affairs informed in Lok Sabha that the government has set up the Urban Infrastructure Development Fund (UIDF) through use of priority sector lending shortfall for creating urban infrastructure in Tier 2 and Tier 3 cities.

About Urban Infrastructure Development Fund:

• It was established through the use of priority sector lending shortfall.
• It will be used by public agencies to create urban infrastructure in tier-2 and tier-3 cities.
• It aims to supplement the efforts of the State Governments / UTs for urban infrastructure development works implemented through Public/ State Agencies, Municipal Corporations and Urban Local Bodies, by providing a stable and predictable source of financing for providing basic services like Sewerage and Solid Waste Management, Water Supply and Sanitation, construction and improvement of drains/ storm water drains, etc.
• It is managed by the National Housing Bank.
• The initial corpus for this Fund is ₹10,000 crore.
• It is established on the lines of the Rural Infrastructure Development Fund (RIDF).
• States will be encouraged to leverage resources from the grants of the 15th Finance Commission, as well as existing schemes, to adopt appropriate user charges while accessing the UIDF.
• It currently covers 459 tier-2 cities and 580 tier-3 cities.

UIDF Loans:

○The interest rate on UIDF loans has been kept at Bank Rate minus 1.5 percent.

○The loan (Principal) will be repayable in five equal annual installments within seven years from the date of draw, including a moratorium period of two years.

○Interest will be payable on a quarterly basis.

                                                                Source: PIB

With reference to Urban Infrastructure Development Fund, consider the following statements:

1. It is established through the use of priority sector lending shortfall.

2. It is used by public agencies to create urban infrastructure in tier-2 and tier-3 cities.

3. It is managed by the National Bank for Agriculture and Rural Development (NABARD).

How many of the above statements are correct?

A.Only one

B.Only two

C.All three

D.None

Answer B