The SAARC Development Fund (SDF), which finances regional projects in South Asia, has its headquarters in which of the following countries?

Introduction / Context:
The SAARC Development Fund (SDF) is the financial mechanism created by the South Asian Association for Regional Cooperation to fund cross border projects in social, economic and infrastructure sectors. Knowing the exact location of the SDF headquarters is a common static general knowledge question linked to regional organisations and their institutional architecture.

Given Data / Assumptions:

• The organisation mentioned is the SAARC Development Fund.
• The task is to identify the country and city where its headquarters are located.
• Options list four South Asian capitals: Kathmandu, Islamabad, Thimphu and New Delhi.
• We assume the present, widely accepted headquarters location.

Concept / Approach:
SAARC distributes its institutions among member countries. For example, the SAARC Secretariat is in Kathmandu, while some specialised centres are in other capitals. The SDF was specifically set up with its headquarters in a smaller member state, Bhutan, to promote balanced institutional distribution. The city chosen was Thimphu, the capital of Bhutan.

Step-by-Step Solution:
Step 1: Recall that the SAARC Secretariat itself is in Kathmandu, Nepal, so Kathmandu is associated with core SAARC coordination, not with the SDF.Step 2: Consider Islamabad, Pakistan and New Delhi, India, which host various regional and international offices, but are not cited in standard references as the seat of the SAARC Development Fund.Step 3: Remember that the SAARC Development Fund was established with its headquarters in Thimphu, the capital of Bhutan, as part of SAARC's strategy to host key bodies across different member countries.Step 4: Match this recollection with the options: “Thimphu, Bhutan” appears exactly as option c and fits the known fact.Step 5: Conclude that Thimphu in Bhutan is the location of the SDF headquarters.

Verification / Alternative check:
A quick verification is to recall common multiple choice questions on SAARC headquarters. One frequently asked pair is “SAARC Secretariat – Kathmandu” and “SAARC Development Fund – Thimphu”. In standard preparation books and official SDF documents, the address of the SDF clearly places it in Thimphu, Bhutan, confirming that option c is correct.

Why Other Options Are Wrong:
Kathmandu, Nepal: Correct for the SAARC Secretariat, not for the SAARC Development Fund headquarters.
Islamabad, Pakistan: Pakistan is a founding member of SAARC but does not host the SDF headquarters.
New Delhi, India: India hosts other regional or international offices, but the SDF headquarters was intentionally allocated to Bhutan.

Common Pitfalls:
A typical mistake is to assume that because the SAARC Secretariat is in Kathmandu, all important SAARC bodies must also be in Nepal. Another common error is to pick the largest or most familiar capital, such as New Delhi, without remembering that SAARC institutions are geographically distributed to give visibility to smaller member states. Careful memorisation of which city hosts which SAARC body avoids such confusion.

Final Answer:
The SAARC Development Fund headquarters are located in Thimphu, Bhutan.