Cabinet approves Pooled Finance Development Fund for ULBs

New Delhi, Sep 29 (UNI) The Cabinet Committee on Economic Affairs (CCEA) today gave its approval for setting up of 'Pooled Finance Development Fund (PFDF)' enabling the Urban Local Bodies (ULBs), including small and medium sized municipalities, to raise funds from the market on sustainable basis to meet their investment needs.

Briefing newspersons on the outcome of the CCEA meeting this evening, Finance Minister P Chidambaram told newspersons here that the Fund will provide enhancement of ULBs to access market borrowings based on their credit worthiness. This will be done through State level pooled finance mechanism, that is State Pooled Finance Entity (SPEP).

The Fund will be set up within one month, he said.

Mr Chidambaram said the bonds issued under the Pooled Finance framework will be eligible for tax free status. However, interest and dividend income earned from investments made from Credit Rating Enhancement Fund (CREF) corpus will not be exempted from income tax.

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