Developers facing denial on bailout scheme applications.

More than two years after a bailout scheme for stalled slum rehabilitation projects was initiated by the state government by providing soft loans, not a single builder has benefited from it.

In October 2017, the government had partnered with the SBI the state-run Shivshahi Punarvasan Prakalp Limited (SPPL), to provide loans between Rs.5 crore – Rs.25 crore to developers whose projects were ineffective due to the lack of funding. The priorities were mid-sized constructors with one or two projects.

In accordance with the terms of the agreement, SBI would charge developers 9.5% interest in the development of saleable components and 8.75% interest on rehabilitation components. SRA schemes work on a cross-subsidy model and an index of incentives for the floor space – developers build homes for sale and rehouse free of charge for slum-dwellers and subsidize the costs of rehab slum-dwellers for free sale.

Moreover, 60% of the saleable components had to be set aside for affordable housing. Many developers have said that this reservation would be a down-turn for them. Over 250 slum rehabilitation projects have stalled in various stages in the city. It is said that the financial crisis is the main cause.

Officials have reported that 15 developers applied for loans under the scheme, with only four approved. Several builders blamed the denial of their applications because of the “stringent terms”.

The officials of the SBI stated that three of the four applications are in the final stages of the loan disbursement process. A spokesperson from the bank explained that it is a process of several considerations to authorize a financial project such as regulatory approvals and financial closure. The bank reported in a statement that the program is still viable.

Officials of the SPPL recommended extending the scheme to all public sector banks.