The Hindu Business Line : Development fund scheme for local bodies launched

The Pooled Finance Development Fund Scheme, which is designed to raise resources through bonds for the development of basic infrastructure in small and medium towns, has been launched in Kerala.

The scheme assumes significance against the backdrop of several of these towns having been forced to put on hold the development of infrastructure because of unavailability of required funds, according to officials of the Kerala Urban and Rural Development Finance Corporation, which has been appointed as the State-level nodal agency for implementing the scheme.

Under the scheme, funds will be made available to local self-government institutions through tax-free bonds for taking up projects such as drinking water schemes, sewerage facilities, liquid and solid waste treatment, roads and overbridges.

The scheme was formulated by the Centre in 2006 and the Union Urban Development Department is extending the policy guidance and assistance for implementing it.

The projects will be identified by the State Pooled Finance Entity under the State Urban Affairs Department. The Finance Entity will also will be responsible for finalising the projects, initiating steps to issue the bonds, monitoring the implementation of the projects and ensuring the repayment of the bonds.

A Sanctioning and Monitoring Committee, chaired by the Secretary of the State Local Self Government Department, will coordinate the implementation of the scheme at the state level. The State Urban Affairs Department will act as the single-window for facilitating mobilisation of funds through the bonds.

Besides, a Pooled Finance Trusty will be appointed to ensure efficient deployment of the funds raised through the bonds for the projects identified. Banks or other financial institutions may be appointed as the Trusty.

A panel of experts will be constituted to examine the financial viability of the projects and provide suggestions.

An independent credit rating agency approved by the Reserve Bank will evaluate the credit worthiness of the local bodies and accordingly fix the quantum of funds to be raised.

More Stories on : Rural Development | Infrastructure | Kerala

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