What is the News ?

Authorities from the Ministry of Union Housing and Urban Affairs have indicated that the initial installment of loans for supporting ongoing projects in tier-2 and tier-3 cities through the Urban Infrastructure Development Fund (UIDF) is expected to be released shortly.

Facts About:

The UIDF is created by utilizing the priority sector lending shortfall.

Objective:

• This fund serves as a resource for public agencies to develop urban infrastructure in tier-2 and tier-3 cities.

Emphasis is placed on essential services such as sewage and solid waste management, water supply, sanitation, construction, and improvement of drainage systems, with a priority on projects that have a significant impact.

The National Housing Bank manages this fund.

It initially has a corpus of ?10,000 crore and is modeled after the Rural Infrastructure Development Fund (RIDF).

States are encouraged to harness resources from the 15th Finance Commission's grants and existing schemes, while also considering user charges when accessing the UIDF.

Currently, it covers 459 tier-2 cities and 580 tier-3 cities.

UIDF Loans:

• nterest rate: Bank Rate minus 1.5%
• The loan principal is repayable in five equal annual installments within seven years from the draw date, including a two-year moratorium period.
• Interest payments are made on a quarterly basis.