The first tranche of loans to fund ongoing projects in tier-2 and tier-3 cities — under the Urban Infrastructure Development Fund (UIDF) announced in the FY24 Budget — will likely be disbursed soon, said officials from the Union Housing and Urban Affairs Ministry. States are also in the process of preparing proposals for new projects, said the officials.
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), in charge of executing the UIDF, had issued guidelines in July and asked states to submit their proposals by September.
“We have allowed the cities to seek funds for ongoing projects for the first two years of UIDF, so the funds will be disbursed soon. For funding new projects, the states are preparing detailed project reports (DPRs),” said a senior Ministry official.
Among the projects set to be funded are sewage treatment plants and sewerage networks, said another official. The UIDF funding can be combined with funding under other schemes of the Ministry such as Swachh Bharat Mission and AMRUT, the official said.
As per NHB guidelines, cities can get loans at a rate that is 1.5 percentage 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 per cent, 85 per cent and 75 per cent for project costs of Rs 5-10 crore, Rs 10-50 crore and Rs 50-100 crore, respectively.
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Among the 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.
The fund cannot be used for maintenance work, administrative expenses, housing, power, telecom, urban transport, health and education projects, as per the guidelines.
NHB officials organised an outreach programme with state and municipal officials in Bihar on July 31 and for Assam, Nagaland, Mizoram and Tripura officials in Guwahati on July 24 and in Raipur on July 26. In these meetings, officials made a presentation about the UIDF and emphasised the importance of the state government and NHB working together, according to statements issued by NHB.
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