Realising the necessity and urgency of safe & potable drinking water, a  separate department in the name of Local Self Government at Secretariat Level was created in the year 1949. In consequence to this Public Health Engineering Department was christened as Local Self Government Engineering Department in the year 1949. Keeping in view the entirely changed situation and pressure on providing other civic amenities as well, the State Government decided to finance such projects where- in a component of loan repayable in easy installments was introduced for such category of towns, which had repayment potential. Side by side efforts were made to seek financial assistance from Life Insurance Corporation of India, which did come, to rescues but only in a very limited way. Efforts were also made to seek soft term loans from International Monitory Fund / World Bank. World Bank put forward a condition that in order to get soft term loans, it would be essential for the State Government to constitute an independent body in the State, who should be made responsibility for repayment of World Bank loan and execution of projects to be financed by the Bank and normal budgetary allocations. As a consequence to this condition the State Government promulgated an ordinance in February 1975 and converted Local Self Government Engineering Department into a corporation by the name of Uttar Pradesh Jal Nigam. This ordinance was subsequently converted into an Act named as Uttar Pradesh Water Supply & Sewerage Act, 1975 (Act N0 43 of 1975). In pursuance of this Act, Uttar Pradesh Jal Nigam came into existence with effect from 18th June 1975.

World Bank assisted in strengthening and expansion of drinking water facilities in 5 KAVAL (Kanpur, Agra, Varanasi, Allahabad, and Lucknow) towns, which were the most populous and important cities of the State. World Bank also assisted in implementation of water supply schemes in  the following districts: