In the context of rapidly growing urbanization process and at the same time financial, technological and administrative deficiencies at the municipal levels, HMG/Nepal in accordance with the Development Board Act, 1956 had established Town Development Fund (TDF) in February 1988 with a view to assist the municipalities in their efforts of overall development. Realizing the very crucial and remarkable role-played by the TDF in urban development sector within eight years since its inception period, HMG/Nepal in view of developing the Board as an autonomous, self reliant, much productive and an efficient financial institution promulgated a separate Act named Town Development Fund Act, 1997. The Act has provided TDF with more autonomy, discretionary power and authority in various fields. The TDF has the following inbuilt social development features:
Loan triggered urban infrastructure growth - supplemented by grants in appropriate situation.
Focus on need-specific capital projects to be undertaken by municipalities compatible with their technical and commercial capabilities.
Linkage with matched contributions by municipalities based on the current revenue generating capability and capacity.
Upgrading of organizational capability of the municipalities through
Development of long-range perspective and strategy for urban infrastructure development;
Prioritization and sequencing of their competing community needs;
Enhancement of their capability to identify capital projects, work out the technical and economic details and plan and execute such projects within budgetary constraints, and
Optimization of the use of scarce resources through innovation and improvisation appropriate to local circumstances.