Tamil Nadu Urban Pooled Finance Facility

Owned by Ashu Sikri (Unlicensed)
Apr 13, 2022
2 min read

  • Case study on a blended finance structure that provided financing for local municipal bodies in TN to invest in water and sanitation facilities (WASH). Its a relatively old example (2006) but apparently well known, managed to raise ~$30mn. See here

  • If you abstract this a bit and put FPOs / farmer orgs in place of the individual municipal bodies and DG in a TA role, is this something that could be interesting to pull together?

    • Each FPO could submit a climate resilience projects with some clear path to repayment which get aggregated up and are the basis of a bond issuance

    • Local govts or someone like NABARD play the role of the TN govt in this example? Need to work with someone who can lead the structuring for this as its pretty complicated

  • Potential for cost savings on administration through smart contracts and DeFi tech

  • WB Case study

 

  • WSPF issued a AA rated bond and then lent that money to local urban bodies who used the funds to implement various WASH projects

  • TN state govt put up 1.5x the annual interest and principal payment amounts in a reserve fund

  • Each borrower made early payments on their borrowings which were held in escrow and put 5% of the principal amount in reserve fund

  • USAID provided a partial loan guarantee which was apparently backed by the govt

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