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Bannu Development Authority was created by the defunct Provincial Urban Development Board  under Section 15 of the Urban Planning Ordinance 1978 (Urban Planning Act 1975)  with a view to establishing Townships Schemes and execute developmental works in Urban Areas of Bannu as assigned to it by the Federal/Provincial Governments, Local Bodies or any other agencies as a deposit works.

The Authority was created for execution of housing scheme in the Bannu urban area due to the dire need of the people for housing scheme. The result being the scarcity of developed land in the vicinity of urban area and highest expensive land in the Bannu city.