Construction loan for slum rehabilitation schemes: Only 4 proposals received in a year

According to the terms of the MoU, while the SBI would provide loans for construction of the free-sale apartments, the Shivshahi Punarvasan Prakalp Limited (SPPL) would extend credit for construction of the rehabilitation component. (Express Photo by Vasant Prabhu)

Written by Neeraj Tiwari 

NEARLY A year since the state government launched a programme to give a fillip to slum rehabilitation projects in Mumbai by offering developers or society members loans for construction of rehabilitation and free-sale apartments, only four proposals seeking such credit have been processed for final approvals.

At the launch of the scheme in October 2017, Housing Minister Prakash Mehta had said the scheme would benefit more than 2300 Slum Rehabilitation Authority (SRA) schemes that were facing funds crunch.

Before the launch of the scheme, the government had signed a memorandum of understanding (MoU) with the State Bank of India to provide loans to promoters of the schemes that had run aground either owing to paucity of funds or because the developer was not able to complete the project.

According to the terms of the MoU, while the SBI would provide loans for construction of the free-sale apartments, the Shivshahi Punarvasan Prakalp Limited (SPPL) would extend credit for construction of the rehabilitation component. The SPPL fully owned by the government. The SRA schemes work on the cross subsidy model and incentive FSI — developers construct homes for sale in the market as well as tenements to rehouse slum dwellers free-of-cost, with the free-sale apartments subsidising the cost of rehabilitating slum dwellers who are eligible for free rehousing. A senior SBI official said the bank has received only four proposals for such a loan, of which three are in the final stages of getting approvals. The last one is currently being processed to verify if it meets the conditions of the MoU. SPPL General Manager R G Salve said the company has received only nine proposals seeking loans for construction of the rehabilitation component. Six of these were rejected as they did not meet the conditions of the MoU. Three others were sent to the SBI to check whether the projects are viable. “Most of the schemes are very old so developers have to make alterations to the plans. This is also one reason for the low number of proposals. According to the MoU, builders have to ensure that 60 per cent of homes built under the free-sale component are affordable homes, only then can they avail the loan,” Salve said. SBI will offer loans on the basis of project viability while SPPL will offer loans at 8.75 per cent interest rate. The SPPL has been trying since 2015 to offer finance to SRA scheme promoters to speed up slum rehabilitation schemes and also to boost the government’s stock of affordable homes. In 2015, It had received a Rs 500-crore infusion of capital from the government, and had then invited applications from SRA scheme promoters and developers to avail credit.

Various measures to expedite SRA schemes across Mumbai have failed to meet targets with the SRA’s website conceding that of the 1,513 redevelopment schemes currently underway in the city, more than 70 per cent have been pending for the last 14 years. As many as 1.2 lakh slum dwellers are affected by the delay.