Town Development Fund (TDF) was established as TDF Board in 1989, by the Formation Order 1988, under the Development Board Act, 1956. TDF was set up for providing financial and technical assistance to the Town Panchayats for their development. Gradually, realizing a need for an autonomous financial intermediary institution, TDF was restructured as an autonomous institution under the Town Development Fund Act, 1997. Since its establishment, TDF has received loans and grants from the Government of Nepal (GoN), most often from contributions originating from the financial assistance of development partners (DPs). When it comes to international donor agencies, the German government has been a steadfast and committed partner, providing grants and technical support through the German Development Bank (KfW) and German Development Agency (GIZ). Similarly, TDF also receives financial and Technical support from the Asian Development Bank (ADB),  the World Bank (WB), European Union (EU), United Nations Capital Development Fund (UNCDF). TDF had already initiated the process for obtaining accreditation to GCF as a Direct Access Entity (DAE), which would definitely enable the institution to access climate finance.

Presently, the GoN has prioritized TDF for transformation with bigger mandate and enhance capital structure. Consequently, "Strategy Paper for Expanding Scope of Works and Capital Restructuring of Town Development Fund" has been approved by the cabinet decision of Government of Nepal in 2080.1.26. On the basis of approved strategy paper, the Board of Directors of TDF has approved the "Draft Bill to Amend and Consolidate the Law on Town Development Fund" and is in the necessary process to be submitted to the Parliament by the Ministry of Urban Development.

Vision

TDF envisions to be a leading financial intermediary institution for promoting the sustainable urban infrastructure financing in Nepal.

Mission

Contribute to improvement of economic and social standard of people by facilitating efficient urban infrastructure asset creation and provisioning urban services in the emerging national development paradigm.

Objective Of TDF

● To improve basic urban infrastructure and services through long term financing for priority sector projects (social, basic utility and revenue generating).

● To strengthen technical, managerial and financial capability of municipalities to identify, implement and evaluate urban development projects; including promotion of institutions working for urban development.

● To improve financial and managerial capacities of other institutions emerging in urban sectors aiming for social development through the provision of long term financing.

The objectives as said above are very much relevant in view of the need for providing financial and technical support to the municipalities in the form of loans and grants. However, its objectives and Act permits for doing much more other activities and extending assistance to other emerging urban centers in Nepal not only limiting to the municipality.

The main purpose of TDF, as a sustainable financial institution, is to mobilize increased financial resources from Development Partners (DP) and Government of Nepal (GoN) and, in the long run, raise private debt from domestic capital market, for high priority urban infrastructure investments, contributing directly to improved living standards of urban population. Specifically, the TDF would:

• Fund viable urban infrastructure projects.

• Provide efficient technical assistance including improved financial management of its clients.

• Facilitate the participation of private sector in infrastructure development.