Urban Challenge Fund

The Union Cabinet has approved the ₹1 lakh crore Urban Challenge Fund as a new Centrally Sponsored Scheme. The scheme provides Central assistance for market-driven urban infrastructure projects.

Urban Challenge Fund (UCF):

Dimension	Key Details
Scheme Type	Centrally Sponsored Scheme
Nodal Ministry	Ministry of Housing and Urban Affairs
Central Corpus	Provides ₹1 lakh crore Central assistance for projects with total investments of ₹4 lakh crore
Funding Model	Centre covers 25 percent; cities raise minimum 50 percent via municipal bonds bank loans and PPP; remaining 25 percent from urban local bodies or state governments
Operational Period	Applicable from 2025–26 to 2030–31 extendable to 2033–34
Pillars	Comprises Cities as Growth Hubs Creative Redevelopment of Cities and Water and Sanitation Infrastructure
Project Selection	Projects selected through challenge-based framework
Exclusion Clause	Does not apply to projects already funded under AMRUT 2.0 or Swachh Bharat Mission 2.0
Special Provision	Credit guarantee support for North Eastern and hilly states and cities with population below 1 lakh under ₹5000 crore repayment guarantee scheme
Guarantee Limit	Central guarantee up to ₹7 crore or 70 percent of loan whichever is lower