Groundwater is an important resource in urban area in terms of social and economic well being of population in most of the developing countries.In urban area,groundwater is mostly used for public water-supply,commercial use and for providing services.The Groundwater abstraction rate is higher than the recharge rate in the valley.That is why groundwater table is declining by 2.5m/year.Thus for managing groundwater the proposed regulatory framework consists of four main components such as Source,Allocation, Infrastructure/Network and Use.The measures under this main components includes provision of License/Permit,Fine to violation,Groundwater users charge (Metering),protection of the source, zoning of the critical area,monitoring of the groundwater wells,Alternative water source,limit losses,public awareness and stimulate efficient use of the resource. This regulatory mechanism will help for the sustainable groundwater management in the valley.