About Urban Infrastructure Development Fund (UIDF):
- UIDF is established through the use of priority sector lending shortfall.
- Purpose: The Fund will be used by public agencies to create urban infrastructure in tier-2 and tier-3 cities.
- The focus will be on basic services like sewerage and Solid Waste Management, water supply and sanitation, construction and improvement of drains/storm water drains, etc., and impact-oriented projects will be prioritised.
- 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 per cent.
- The loan (Principal) will be repayable in five equal annual instalments within seven years from the date of the draw, including a moratorium period of two years.
- Interest will be payable on a quarterly basis.
What are tier-2 and tier-3 cities?
- The NHB, the nodal agency for the implementation of the UIDF, defines tier-2 cities as those with a population of 50,000 to less than a lakh and tier-3 cities as those between one lakh and less than a million as per the 2011 census.
Key Facts about Rural Infrastructure Development Fund (RIDF):
- The RIDF was set up by the Government in 1995-96 to finance ongoing rural Infrastructure projects.
- The Fund is maintained by the National Bank for Agriculture and Rural Development (NABARD).
- Contribution: Domestic commercial banks contribute to the Fund to the extent of their shortfall in stipulated priority sector lending to agriculture.
- Main Objective: To provide loans to State Governments and State-owned corporations to enable them to complete ongoing rural infrastructure projects.
- Repayment period: Loan to be repaid in equal annual instalments within seven years from the date of withdrawal, including a grace period of two years.
