In view of the rapid pace of urbanization in India, the urban infrastructure sector requires an enhanced focus. The Ministry of Urban Development, Government of India (MoUD) has launched the Jawaharlal Nehru National Urban Renewal Mission (JnNURM) in the year 2006 with the view to promote sustainable investments in urban infrastructure sector with an outlay of Rs.1,20,000 Crores in order to enable 63 key Indian cities to continue to drive economic growth.. The Government of India (GoI) also has launched in the same year the Urban Infrastructure Development Scheme for Small and Medium Towns (UIDSSMT) to cater to the infrastructure needs of the small and medium towns of the country to drive economic growth.

As per the JnNURM scheme, the Government of India provides grant of 50 % of the project cost. The respective state governments contribute around 30 % as grant. These contributions may slightly vary from town to town. The balance has to be brought in by the respective urban local body.

Further the JnNURM also encourages the local bodies to conceive and implement Public Private Partnerships (PPP) in creation and maintenance of urban infrastructure based on long-term concession agreements to make service delivery more efficient and to utilise private sector funding by tapping the commercial debt and equity market. This arrangement is expected to relieve the urban local bodies of substantial investment burden on their books and to make scarce public resources available for core civic services.

PMDOF - Corpus

In line with the GoI objective of attracting commercial debt into urban infrastructure projects, both to urban local bodies directly and to the Special Purpose Vehicles (SPVs) promoted under PPP arrangements, IL&FS along with other sponsors viz IDBI, IIFC, Canara Bank and other lenders have pooled together a line of credit facility for a maximum sum of Rs.2750 Crore by entering into a Memorandum of Agreement (MoA) on 13th October 2006. The initiative was formally launched as Pooled Municipal Debt Obligation (PMDO) Facility. The other signatories to this MoA are the Asset Manager viz IL&FS Urban Infrastructure Managers Limited (IUIML) and the IL&FS Trustee Company Limited (ITCL) in the capacity of Trustees to the Facility.

Salient Features of the PMDO Facility
Tenor: 13 Years (maximum)
Moratorium: 3 year (maximum)
Interest Rate: Floating rate based on prevailing market conditions
Corpus: Rs. 2,750 Crores


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