TAMIL NADU URBAN DEVELOPMENT FUND

Tamil Nadu Urban Development Fund (TNUDF) was established by Government of Tamil Nadu on November 29, 1996, as a Trust under The Indian Trust Act 1882., to finance the implementation of urban infrastructure projects in the State of Tamil Nadu. TNUDF was formed by conversion of Municipal Urban Development Fund (MUDF), with contribution from Government of Tamil Nadu along with all India financial institutions viz., ICICI Bank Limited (formerly ICICI Ltd), Housing Development Finance Corporation Limited and Infrastructure Leasing and Financial Services Limited. TNUDF is the first public-private partnership providing long term debt for civic infrastructure on a non-guarantee mode. TNUDF is managed by a Corporate Trustee viz., Tamil Nadu Urban Infrastructure Trustee Company Limited (TNUITCL). The Board of Trustees periodically review the lending policies and procedures. TNUDF is financing urban infrastructure projects in the State of Tamil Nadu by availing funds from external agencies viz., World Bank, KfW (German Funding Agency), Japan International Cooperation Agency and Asian Development Bank.

Tamil Nadu Urban Infrastructure Financial Services Limited (TNUIFSL) is the Fund Manager of TNUDF.

FUND OBJECTIVES

• Fund Urban Infrastructure projects, which improve the living standards of the urban population
• Facilitate private sector participation in infrastructure through joint venture and public-private partnership
• Improve the financial management of urban local bodies enabling them to access debt finance from markets

ELIGIBLE BORROWERS

All categories (Corporations, Municipalities and Town Panchayats) of Urban Local Bodies (ULBs) in the State of Tamil Nadu and Chennai Metropolitan Water Supply & Sewerage Board (CMWSSB) are eligible to avail financial assistance in the form of loan for implementation of urban infrastructure projects.

RESOURCES

The initial corpus is contributed by Government of Tamil Nadu and other contributories. Further, financial resources are mobilized by way of lines of credit from multilateral / bi-lateral agencies and institutions such as World Bank, KfW (German Development Bank), Japan International Cooperation Agency and Asian Development Bank.

External lines of credit are in operation:

Tamil Nadu Urban Flagship Investment Program (TNUFIP) assisted by Asian Development Bank (ADB)

The TNUFIP has been launched in the year 2018 with the assistance of Asian Development Bank (ADB). The objective of this Program is to develop priority water supply, sewerage and drainage infrastructure located within strategic industrial corridors of Tamil Nadu, support innovative pilots, improve urban governance and strengthen the capacity of State and local institutions to enhance environmental sustainability, climate resilience and urban livability. TNUFIP has three phases (Phase-I, Phase-II and Phase-III). The assistance from ADB is US$ 502 million for all the three phases. The project implementation period is from November 2018 to December 2025. A sum of Rs.1086.24 crore is allotted as loan TNUDF for on-lending to ULBs. The details are furnished below:

Rs. in crore

S#	Details	Total Outlay	Assistance by ADB	Loan to TNUDF
1	Phase 1: Outlay of US $ 477.50 mn, with ADB assistance of US $ 171.00 mn) (November 2018 and December 2023)	3070.33	1099.53	304.78
2	Tranche 2: Outlay of US $ 593.00 mn with ADB assistance of US $ 206.00 mn) (December 2019 and December 2025)	4151.00	1442.00	487.01
3	Tranche 3: Outlay of US $ 193.50 million with ADB assistance of US $ 125.00 million) (December 2022 and December 2025).	1478.34	955.00	294.45
	Total	8699.67	3496.53	1086.24

Sustainable Municipal Infrastructure Financing in Tamil Nadu Phase III (SMIF-TN-III) Program

The SMIF-TN-III program has been launched in the year 2022 with the assistance of KfW (German Development Bank). The objective of the Program is to finance climate resilient municipal infrastructure projects in the State of Tamil Nadu. The total outlay of this Program is Rs.6,398.25 crore (Euro 750.00 million), Of which KfW’s assistance is Rs.4,265.50 crore (Euro 500.00 million). The contribution of the State Government and other sources being Rs.2,132.75 crore (Euro 250.00 million). Further, grant assistance of Rs.68.25 crore (Euro 8.00 million) by KfW have been provided towards Technical Assistance. A sum of Rs. 2132.75 crore is allotted as loan TNUDF for on-lending to ULBs.

MONITORING & RECOVERY

As for monitoring and recovery, efforts are made to assess the credit risk and concentration of credit. Wherever undue delay is noticed in repayment of dues, close follow-up action is being pursued. Necessary provision has been included in the loan agreement to escrow the collections of ULBs and / or to maintain a Debt Service Reserve Fund as the case may be. TNUDF has achieved record 100% collection of debt service dues from ULBs.