HUDCO started a window for financing the development of urban infrastructure called 'Urban Infrastructure Finance Wing' in the FY 1989-90 for. The core or priority sector infrastructure facilities include projects in the sectors of water supply, sewerage, drainage, solid waste management, roads, electricity, smart cities, industrial infrastructure, etc in the urban areas. Later on, development of social infrastructure facilities required in the neighbourhood areas, but not essentially viable on standalone basis, undertaken by the government agencies were also included. The social infrastructure component like play/primary schools, working women hostels, health centre, play grounds, police stations, courts, jails, crematorium etc. which are not financially viable received benefit of funding at lower rate of interest.
The funding of infrastructure projects in the year 1990 was relatively new concept as these projects required high capex and had long gestation period while return was not-guaranteed as the political will to charge basic services was not there. HUDCO entered in the area and provided long term loans (upto 20 years) to the ULBs for meeting the capital requirement and moratorium during the construction period on cash flow basis. HUDCO’s intervention created awareness to charge for the improved services so that enough return on the investment is available to service the loan and maintain the services.
The main stress of HUDCO was on improving quality of life of the citizens by providing the minimum municipal services to all. The instruments like user to pay were encouraged to keep the development on sustainable basis. HUDCO promoted projects on cash-flow basis where levy of charges like improvement / betterment / area development etc., advance registration charges for water supply connection, metering, controlling Unaccounted for Water, cross subsidization of water to poor through telescopic rates, connection charges for sewerage, sewerage cess or conservancy tax based on plot area or percentage of water charges, users to pay principle in toilets, collection charges for solid waste management etc. The CPHEEO norms and environment concerns were basis for technical appraisal of the proposals. The insistence on provision of individual pour flush toilets in all dwelling units, provision of 15% land area for in-formal sector in any new area development project, compulsory Rain water harvesting for more than 200 sqm plots etc. have been some of the initiatives of HUDCO recognised by the Government and adopted in their policy.
HUDCO was first to sanction the project of reuse of waste water in thermal power project, energy and material recovery from municipal solid waste through public private partnership etc. HUDCO also extends take out finance for projects and the large infrastructure projects are being funded on consortium basis to cover the project risk.
HUDCO is one of the few institutions which funds land acquisition and its integrated development. An innovative product has been recently launched called HuNNY(HUDCO Nav Nagar Yojana) for planned development of city extension areas.
HUDCO has been actively participating in Government of india's action plan schemes such as JnNURM, Smart Cities, Atal Mission for Rejuvenation and Urban Transformation (AMRUT), Heritage City Development and Augmentation Yojana (HRIDAY), Swachh Bharat Mission (SBM) by providing viability gap funding to the States/ULBS.
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