'Too many conditions apply' keeps Mumbai builders away from slum loan scheme

Representational picture

The long list of conditions to comply with is trumping low-interest rate, and that's why city builders are reluctant to accept the loans offered by Shivshahi Punarvasan Prakalp Limited (SPPL), a state government-owned company.

Incorporated to boost slum projects in the city, it had come up with a scheme last year - loans at interest rates lower than other banks to developers constructing affordable homes - but to the dismay of slum dwellers, just two applications have been scrutinised and are in the final stages.

Hurdles galore
Housing minister Prakash Mehta had announced that if developers are ready to construct a part of their sale component for affordable housing, as per Pradhan Mantri Awas Yojana guidelines, they'll be eligible for loans at low-interest rates. But the long list of conditions to comply with before an application is held eligible has not encouraged many to come forward. The two shortlisted are among the 11 applications received, all hoping to get a push for their project.

Also, SPPL alone can't decide disbursal of loans. The nationalised bank it has a tie-up with needs to approves the sale component of the project, ie approve the loan amount in totality, said sources, adding that if it doesn't, even the rehabilitation component gets stuck.

Another stringent norm is to have 75 percent of the plot vacant and slum dwellers given alternative accommodation. With this not done in more than 50 percent slum rehabilitation projects, the developers concerned automatically get eliminated from even applying for the scheme.

'Not too feasible'
While authorities said they were open to changes, they added that unless some serious lacunae were found in the scheme, applications would be accepted on these terms.

A developer requesting anonymity said, "First, we have to redraw our entire project if we want to apply for this loan, as we have not planned our sale component keeping affordable housing in mind. Further, if there are so many conditions to adhere to, we might as well take the loan from other banks." (The scheme, however, was launched after many developers went bankrupt and banks were not keen on giving them loans.)

SPPL General Manager R G Salvi said, "It is not time-bound, like a tendering process; this is an open-ended scheme, which is here to stay. If developers come forward, we will help them, so that slum dwellers get houses. And, positive changes to the scheme is something that can definitely be looked at, time and again."

Quotes
'First, we have to redraw our entire project if we want to apply for this loan, as we have not planned our sale component keeping affordable housing in mind. Further, if there are so many conditions to adhere to, we might as well take the loan from other banks'
A developer

vs
'It is not time-bound, like a tendering process; this is an open-ended scheme, which is here to stay. If developers come forward, we will help them, so that slum dwellers get houses. And, positive changes to the scheme is something that can definitely be looked at, time and again'
R G Salvi, SPPL general manager