Goals of the PFDF Scheme
- The urban infrastructure projects can be enhanced further and established in a much better way by ensuring that proper steps are taken to develop the capability and manage the project’s finances simultaneously.
- All the industrial projects that are designed keeping in mind the proper credit enhancement tend to succeed with a much larger success rate.
- The projects were designed to provide the facility to service the market debt and hence give satisfaction to both the rating agencies and the investors by solving the money and the investment problem. Therefore the bankable projects could grow and with this increase the growth of the market. This all was to be done keeping the PFDF context in mind.
- The state pool finance entities SPFE were also to be provided credit enhancement under the PFDF scheme in order to access the capital markets through pool financing bonds.
- The urban local bodies were to be financed during this process, which will help them build their capital and increase the market standards by solving their investment problems.
- It would also reduce the cost of borrowing money from the moneylenders and taking advantage of the poor section of society when they need money.
- Also, it would increase the way the people would manage large industrial-level projects and lead to better improvement strategies in both the development of the market and the individuals.
- It would also lead the money lenders to rethink their credit percentages, and the people would be confident enough to renegotiate their current loans.
Pooled Finance Development Fund Scheme
The Pooled Finance Development Fund (PFDF) scheme was started to initiate the facility of providing credit enhancement to the urban local bodies. The PFDF scheme gained popularity after it came into force in the year 2006. The scheme was first approved by the central government before it came into action. The main agenda of this scheme was to access the market borrowings for all the urban local bodies and then provide them with a qualified credit limit that was available based on their profile. This process was to be made available through the state-level Pool finance mechanism.
Since the mechanism was to be implemented at the state level, therefore, the name state-level pool finance mechanism was derived from the entire process of the PFDF scheme. The PFDF scheme had the following goals in mind.