The rapid urbanization, industrial growth, and socio-cultural activities along riverbanks in hilly cities are transforming land use and intensifying water infrastructure challenges. Paonta Sahib, a culturally significant town in Himachal Pradesh on the Yamuna River, along the foothills of the Himalayas exemplifies these pressures due to its religious tourism, industrialization, and mining activities. This study explores sustainable riverfront development at Paonta Sahib, addressing socio-cultural, environmental, and technical concerns essential for eco-sensitive urban planning. A SWOT analysis highlights strengths such as Paonta Sahib's strong cultural identity and economic potential, alongside weaknesses like limited water infrastructure and unregulated land use. Opportunities for eco-sensitive zoning and circular economy practices are proposed as strategies to mitigate environmental impacts, with financial projections indicating a 68 million INR annual cost recovery over a 35-year development period. Additionally, pollutant scenario analysis is recommended to support effective water quality management. Findings emphasize the importance of collaborative efforts between local authorities, technical experts, and communities to address the extreme hydrological, environmental, and planning challenges faced by riverbank cities. This balanced approach seeks to enhance Paonta Sahib’s urban identity while preserving ecological integrity, offering a model for sustainable development in similar hilly settlements. The proposed framework aims to guide future policies for resilient riverfront urbanization, emphasizing adaptive planning, community engagement, and infrastructure that support both economic growth and environmental sustainability.