1. To improve basic urban infrastructure and services through long term financing for priority sector projects (social, basic utility and revenue generating).
  2. 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.
  3. 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.