Urban infrastructure financing company for the state of Karnataka.

1. KARNATAKA URBAN INFRASTRUCTURE
DEVELOPMENT AND FINANCE
CORPORATION

2. Introduction:
• KUIDFC incorporated as a public limited company under companies Act, 1956
on 02.11.1993: a State Government Company.
• Objectives: to prepare, formulate & implement projects, schemes, programmes
relating to infrastructure development in urban areas
• Also provides technical, financial, consultancy & other services to ULBs
including implementation of master plans.
• Appointed as Nodal agency of the state for implementation of various urban
infrastructure development projects in state of Karnataka.
• Secured status of State Level Financial Institution (SLFI) from GoI.

3. Is the institution trying to solve a governance
problem?
Problems of Governance solved:
1. Delay in implementation
2. Corruption
3. Proper & timely financing
4. Capital financing for large infrastructure projects
5. Expert & technical opinion in schemes, projects & programmes.

4. Do you think a separate institution was required
to solve this problem?
Yes.
• KN : rapidly urbanising state ( 1/3rd population : 18 million live in urban areas)
• Gov. of Karnataka needed an agency to assess infrastructure needs of urban
areas, formulate projects, act as nodal agency to implement government
programmes & to raise finances for same.
• To full-fill these, KUIDFCL was formed in 1993: as a main arm of Karnataka
government relating to urban infrastructure developmental projects
• Also to act as KN government’s interface with external leading agencies.
• And due to its performance: KUIDFC nominated state level Nodal agency for
Pooled Finance Development Facility (PFDF) patterned on USA model by GoI.

5. Which urban service is this institution working
for? Is it a capital-intensive service?
Works in the service of providing infrastructure related to:
• Environmental management :
• Land development
• Sanitation
• Road management
• Transportation
• Water supply
• SWM
• Majority of these projects are capital intensive, requiring huge capital at one go,
with no guaranteed returns.
• One example : GBWASP: Greater Bangalore Water & sanitation project : the
project had very large capital expenditure with primary benefits of this
expenditure flowing to households taking direct water connections (447.06 cr total

6. Do you think Municipal government’s own
finances were not enough to fund it?
• No, they are not, like any other state’s ULB, KN’s ULBs are not generating that much
of revenue surplus to carry out capital intensive projects
• That’s why, KUIDFC has mandate to extend financial assistance by way of loans &
advances to ULBs for their developmental schemes.
274.81
531.43
798
1926
2978
5020.44
5980.31
0
1000
2000
3000
4000
5000
6000
7000
1997-98 2000-01 2004-05 2007-08 2010-11 2013-14 2016-17
lakhrs
years
Total transfers to ULBs in state of karnataka
ULBs
Source: Karnataka SFC action taken reports.

7. How is this institution governed differently?
Who are the stakeholders?Which
legislations/policies enable it?
• Legislation: Companies Act, 1956: Public limited company.
• Now, companies Act, 2013.
• Managed by managing director: IAS officer,
assisted by team of professionals & officers
from state cadre
• Under overall superintendence & control of
Board of Directors ( total 10 in number:
8 male, 2 female: all IAS officers): full Government control.
• Major stakeholders: Governor of KN, Principal officers of GoKN & chief executive
officers of developmental authorities established by GoKN: no private party
involved.
Public Limited
Company:Company
that has limited liability
and offers shares to the
general public. It’s stock
can be acquired by
anyone, either privately
through (IPO) initial
public offering or via
trades on the stock
market.

8. Structure of Organisation:
• A state government company.
• Board of directors, decision making bodies : all appointed by state government & are either rofficials of center gov or s
Source: KUIDFC
website

9. Financial structure of the institution:
• Authorised Share capital of company : Rs 100 million
divided into 1 million equity shares of Rs 100/- each.
• Fully Paid up equity capital rs.806 million.
• 2,50,00,000 equity share of Rs 10/- each but not paid.
• The corporate expenses are charged and set off against the
budgetary grants allocated by the GOK.
• Works on: “no profit, no loss” status.
• The short term and long term assets and liabilities, except corporate
held assets, are held on behalf of GOK.
SL No Share Holders No of Shares
1 Governor of Karnataka 606476
2 Chairman, Bangalore Development
Authority, Bengaluru
200001
3 Additional Chief Secretary to
Government, Vidhana Soudha, Bengaluru
1
4 Addl. Chief Secretary to Government,
Urban Development Department, IV Floor,
Vikasa Soudha, Bengaluru.
1
5 Principal Secretary to Government,
Finance Department, II Floor, Vidhana
Soudha, Bengaluru
1
6 Principal Secretary to Government,
Housing Department, II Floor, Vikasa
Soudha, Bengaluru
1
7 Secretary to Government, (M & UDA),
Urban Development Department, IV Floor,
Vikasa Soudha, Bengaluru
1
8 Secretary to Government, (Expenditure)
Finance Department, II Floor, Vidhana
Soudha,Bengaluru
1
9 Chairman, Bangalore Water Supply &
Sewerage Board, Bengaluru
1
10 Metropolitan Commissioner, B.M.R.D.A.,
LRDE Building, Ali Askar Road, Bengaluru
1
11 Commissioner, Bangalore Development
Authority, Bengaluru
1
12 Commissioner, Bruhut Bengaluru
Mahanagara Palike, Bengaluru
1
13 Deputy Director, Town Planning,
Bangalore Metropolitan Region
Development Authority, Ali Asker Road,
Bengaluru
1
Source: KUIDFC website.

10. Financial Structure of Project:
Structure depends on type of project it is implementing and the role KUIDFC will be
doing for the project/ scheme/ programme.
For example, for GBWASP the structure will be:
• It managed trust : KWSPF
• Formulated project
• Managed finances & expenses
• Played role of PFDF.
• Debt/equity ratio for this project was 0.76.
Source: KUIDFC annual report 2015-16

11. 35%
22%
14%
29%
% share beneficiary contribtution
Grants from GoKN
Mega city loan from GoI
Market borrowing
through bonds
For project considered GBWASP:
- Financed through combination of
Public & private sources.
- Municipal bonds floated: KWSPF:
functioned as an financial
intermediary between ULB &
capital market.
- Fund secured by USAID 50%
guarantee on principal.
- ULB property tax revenues placed
in an escrow account served as a further safeguard.
- In 2005, the fund issued 1000 tax free municipal bonds at an interest of 5.95% , term
of 15 years.
- KUIDC was in charge of managing the Karnataka water & sanitation pooled fund
(KWSPF)
Source: KUIDFC annual report 2015-16.

12. For NKUSIP : North Karnataka Urban Sector Investment Programme:
• The company is the nodal agency for implementation, monitoring and
management of funds of the Asian Development Bank (ADB) assisted NKUSI
Programme.
• Empowered Committee (EC) under the Chairmanship of the Additional Chief
Secretary, Government of Karnataka with Additional Chief Secretary, Urban
Development Department, Principal Secretary, Planning Department, Secretary
(M&UDA), Urban Development, Secretary (Expenditure), Finance Department,
Managing Director, KUW&SDB, Managing Director, KUIDFC and Director,
Municipal Administration as members has been constituted for the programme.
• The EC enjoys the authority to take decisions pertaining to the programme
implementation

13. Do you think that the project is financially
sustainable in the long term? Is it generating
enough revenues? Is there viability gap
funding? How much is it? Is it justified
Yes, it is financially sustainable.
• Feasibility report for project: estimated 35% (119,45Cr) will be coming from
citizens themselves, till date 200cr has been collected.
• In the financial structure seen: no need for viability gap funding.
• This project tries to deploy: citizen as stakeholder
• Equates participation with financial contribution to new infrastructure
investment.

14. What are the resultant user charges? Are they
affordable?
For project considered:
• The initial specified BCC in 2003 was a one-time
flat rate of Rs 8,500 for domestic properties and
Rs 17,000 for non-domestic users.
• This was later revised to a slab system of
Rs 10,000 for the lowest slab for plots measuring
up to 2,400 sq ft.
• Citizens were also required to pay a penalty in
event of delayed payment: taken in order to
pressure beneficiaries to contribute to the project.
Charges per property size (rs)
<600 sq ft 600-1200 sq
ft
1200-2400 sq
ft
>2400 sq ft
Residential 2500 ( now
waived)
5000 10,000 15,000
Commercial 5,000 10,000 20,000 Rs 8/ sq ft
Penalty per
month
starting 1
august 2005
50 ( now
waived)
100 200 300
Source: India environmental portal report, analysis of GBWASP
Source: India environmental portal report, analysis of GBWASP