U.S. Experience Helps Small Indian Cities Raise Money For Development : India Launches Rs.400 Crores Fund Designed With U.S. Assistance

November 20, 2006

CHENNAI – The Government of India today launched a Rs. 395 crores ($ 88 million) Pooled Finance Development Fund for city infrastructure, designed with assistance from the U.S. Agency for International Development (USAID).

The Pooled Finance Development Fund will allow small and medium-sized Indian cities to access capital markets for investment in essential municipal infrastructure services, especially water and sanitation. It will also provide credit enhancement grants to state financial institutions to borrow from the market.

Addressing the participants of the national workshop on the Pooled Finance Development Fund in Chennai, jointly organized by the Indian Ministry of Urban Development and USAID, U.S. Consul General David Hopper said: “Pooled bond financing has great potential in India. In the U.S. we have seen how such financing can contribute to developing infrastructure. The U.S. has considerable experience in bond financing and using revolving funds to improve water supply and sanitation.”

Mr. Hopper further said, “We hope that the Government of India’s Pooled Finance Development Fund will assist Indian cities augment and expand water services. We hope that U.S. experience continues to be valuable to the Fund’s operations.”

USAID, under its bilateral Financial Institution Reform and Expansion project, helped the Indian government develop the Pooled Finance Development Fund using U.S. state-level bond banking experience. The Fund will assist small and medium cities in developing innovative ways to finance their infrastructure needs.

Related Link: Read full text of the speech