NEW DELHI: The government has inked a deal with the World Bank for a $400 million loan for an urban development project in Tamil Nadu.

"The loan and project agreements for World Bank (IBRD) assistance of $400 million for Tamil Nadu Sustainable Urban Development Project were signed between the Government of India/Government of Tamil Nadu and World Bank here," Finance Ministry said in a release.

Total size of the project is $600 million, of which $400 million would be financed through the World Bank arm International Bank for Reconstruction and Development (IBRD).

The project objective is to improve urban services in urban local bodies (ULBs) of Tamil Nadu.

The project will support improvement in range of urban services, including water, sewerage, municipal solid waste, urban transportation, sewerage management and storm water drainage, said the release.

"The project also envisages creation of a reserve fund to provide credit enhancements for municipal bonds and other market based loan instruments issued by ULBs."

It will also provide results-based grants to eligible ULBs to implement new urban-management models that strengthen governance and financial sustainability.

Further, the project will support strengthening the capacity of ULBs and urban sector officials, it added.

The loan agreement was signed by Raj Kumar, Joint Secretary, in the Finance Ministry and Onno Ruhl, Country Director, World Bank (India).

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