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TAMIL NADU URBAN DEVELOPMENT FUND

Municipal Development Funds provide a much-needed link between civic infrastructure financing needs and domestic capital markets. The urban financing challenge for Tamil Nadu, given the high urbanisation trends and undersupply of civic infrastructure is self-evident.

Since 1988, Government of Tamil Nadu has been implementing the Tamil Nadu Urban Development Project (TNUDP) which was financed by International Development Agency (IDA) of World Bank, of which one of the components was the Municipal Urban Development Fund (MUDF).

The successful track record of MUDF encouraged Government of Tamil Nadu to broaden the scope of the Fund, with a view to attract private capital into urban infrastructure and facilitate better performing ULBs to access capital markets.

Tamil Nadu Urban Development Fund (TNUDF) was established on November 29, 1996, as a Trust under The Indian Trust Act 1882., for development of urban infrastructure 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.

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
  • Operate a complementary window, the Grant Fund, to assist in addressing the problems of the urban poor
  • 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 resources for TNUDF are the receipts from Government and other contributors towards Units and loans availed from external funding agencies. The details of the externally aided projects are furnished below:

Tamil Nadu Urban Development Project – III (TNUDP-III) assisted by World Bank

The TNUDP-III with the assistance of World Bank launched on 19.10.2005 was completed on 31.03.2014. The objectives of TNUDP III are to develop TNUDF as financial intermediary to provide financing for infrastructure to ULBs on a sustainable basis, to provide financial assistance to implement urban infrastructure projects and strengthen urban reforms.

A sum of Rs.640.16 crores has been disbursed as term loan to the ULBs based on the progress of the projects under TNUDP-III as on 31.03.2018.

Tamil Nadu Sustainable Development Project (TNSUDP) assisted by World Bank

The TNSUDP with the assistance of World Bank was launched on 03.06.2015. The Project Development objective is to improve urban services in participating ULBs in financially sustainable manner and to pilot improved urban management practices in selected cities.

A sum of Rs.599.89 crores has been disbursed as term loan to the ULBs based on the progress of the projects under TNSUDP as on 31.03.2018.

Tamil Nadu Urban Infrastructure Project (TNUIP) assisted by Japan International Co-operation Agency (JICA)

TNUIP with the assistance of JICA was launched on 25.03.2008 and completed on 25.03.2016. The objective of the Project is to provide safe and reliable water supply and sewerage services in ULBs by providing long-term financial assistance to construct and improve water supply and sewerage facilities, thereby contributing to improvement of living conditions of local residents in the concerned areas.

A sum of Rs.243.49 crores has been disbursed as term loan to the ULBs based on the progress of the projects under TNUIP as on 31.03.2018.

Sustainable Municipal Infrastructure Financing – Tamil Nadu (SMIF-TN) assisted by KfW

The SMIF TN Program with the assistance of KfW(German funding agency) was launched in 2008. The objective is to improve the living conditions of residents in urban areas by constructing and improving water supply, sewerage and other urban facilities. The Program has two Phases and the Phase II has two parts.

A sum of Rs.683.90 crores (Rs.371.52 crores under SMIF TN Program, Rs.256.01 crores under SMIF TN-II-1 Program and Rs.194.25 crores under SMIF TN-II-2 Program) has been disbursed as term loan to the ULBs based on the progress of the projects up to 31.03.2018.

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 efficiency continuously for the past fourteen financial years.