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Economy
Mahesh

06/09/23 06:40 AM IST

First set of infra loans for tier 2, tier 3 cities to be disbursed soon

In News
  • 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.
About UIDF
  • 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.
  • Cities must repay the loan amount within seven years from the date of withdrawal in five equal installments, including a two-year moratorium period where interest payments are due at the end of each quarter.
  • UIDF funds cannot be used for projects related to maintenance, administrative expenses, housing, power, telecom, urban transport, health, or education, as specified in the guidelines.
  • Cities can obtain loans at a rate 1.5 percentage points lower than the prevailing bank interest rate through the UIDF, making it an attractive financing option for urban development projects.
  • 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.
  • 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.
Source- Indian Express

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