Urban Infrastructure Development Fund

September 5, 2023

The first tranche of loans to fund ongoing projects in tier-2 and tier-3 cities — under the Urban Infrastructure Development Fund (UIDF) will likely be disbursed soon.
The fund was announced in the FY24 Budget.
The fund makes low-cost loans available to 459 tier-2 cities with a population between 1 lakh and 9,99,999 and 580 tier-3 towns with a population between 50,000 and 99,999 as per the 2011 Census.
The National Housing Bank (NHB) is in charge of executing the UIDF.
The UIDF funding can be combined with funding under other schemes of the Ministry such as Swachh Bharat Mission and AMRUT.
Funding
- Cities can get loans at a rate that is 1.5 % points less than the prevailing bank interest rate. They will have to repay the amount within seven years from the date of withdrawal in five equal instalments, including a two-year moratorium period where interest will have to be paid at the end of each quarter.
- The amount of the loan will be 90 %, 85 % and 75% for project costs of Rs 5-10 crore, Rs 10-50 crore and Rs 50-100 crore, respectively.
Projects that can be funded under the UIDF are water supply, sanitation, construction of roads, comprehensive area development, local area planning for decongestion, heritage conservation, town-planning schemes and parks with open gyms that do not involve major construction.
- Fund cannot be used for maintenance work, administrative expenses, housing, power, telecom, urban transport, health and education projects.