What is Urban Infrastructure Development Fund (UIDF)?

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What is Urban Infrastructure Development Fund (UIDF)? Blog Image


Finance Minister recently announced that government will set up an Urban Infrastructure Development Fund (UIDF) of Rs 10,000 crore per year for creating infrastructure in Tier-2 and Tier-3 cities.

About Urban Infrastructure Development Fund (UIDF):

  • UIDF will be 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.
  • It will be managed by the National Housing Bank.
  • It will be 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. 


What are tier-2 and tier-3 cities?

  • Cities with a population in the range of 50,000 to 100,000 are classified as tier 2 cities, while those with a population of 20,000 to 50,000 are classified as tier 3 cities.


What is Rural Infrastructure Development Fund (RIDF)?

  • The RIDF was set up by the Government in 1995-96 for financing 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.


Q1) What is the mandate of National Housing Bank?

The principal mandate of the Bank is to promote housing finance institutions to improve/strengthen the credit delivery network for housing finance in the country. The Bank plays a central role in the growth of dedicated housing finance institutions and provides financial support to them.

Source:  Government to provide Rs 10,000 crore/year under Urban Infrastructure Development Fund