The key issue that has led to majors concerns over financing of these projects is that all the loans extended by these institutions to such slum rehabilitation projects are not recognised by the Slum Rehabilitation Authority (SRA), a government body that serves as the planning and governing authority for all slum areas in Mumbai and Thane.

The government of Maharashtra's amnesty scheme aimed at kick-starting stalled housing redevelopment and rehabilitation projects is expected to help financial institutions unlock funds worth Rs 35,000 crore that are stuck in loans extended by them to such projects, Maharashtra's Housing Minister Jitendra Awhad, told ET.

This will also benefit thousands of slum dwellers and project beneficiaries, apart from offering a major relief to several leading financial institutions and funds that have provided loans to slum rehabilitation projects in the country's largest and most expensive property markof Mumbai Metropolitan Region (MMR).

A significant portion of these loans is part of portfolios of large institutions including DHFL, which has now been taken over by the Piramal Group, HDFC Capital, Altico Capital, IIFL and Yes Bank.

"This amnesty scheme is expected to help thousands of slum dwellers as their projects will get completed and will also unlock financial institutions' funds worth more than Rs 35,000 crore stuck in these projects," Awhad said.

Considering the interest of slum dwellers at large in such slum rehabilitation schemes as well as the financial institutions, entities that have recognition of the Reserve Bank of India, SEBI and the National Housing Bank will be allowed to come forward for completion of projects to which they have granted financing, he said.

The key issue that has led to majors concerns over financing of these projects is that all the loans extended by these institutions to such slum rehabilitation projects are not recognised by the Slum Rehabilitation Authority (SRA), a government body that serves as the planning and governing authority for all slum areas in Mumbai and Thane.

By participating in this amnesty scheme, financial institutions will be able get the security for their loans as it will be recognised by the SRA and this will also help them recover their dues as the projects will be revived bringing in the much-needed liquidity.

"The amnesty scheme announced for SRA projects will bring big relief for the lenders to these projects and help in recovery of the money stuck in many SRA projects. The scheme is expected to encourage corporate participation as well as availability of institutional finance because of the risk mitigation measures proposed," Rajnish Kumar, former chairman of the State Bank of India.

The veteran banker hopes the scheme will prove to be a gamechanger in making Mumbai a slum-free city.

In a separate move, the government has already cancelled letter of intents (LOIs) issued for rehabilitation of 520 slums in Mumbai and will now reallot the same to new developers in a bid to ensure over 40,000 families that are affected due stalled work at these projects get relief through delivery of their homes soon.

The government's move aimed at reviving these stalled projects is expected to lead to corporatisation of SRA projects which were otherwise treated as an informal segment that many institutions are not comfortable with given the on-ground issues including dealing with slum dwellers.

The credit rating of financial institutions that have exposure to such SRA projects is expected to improve in the backdrop of enhanced liquidity and cash flows as they opt for this amnesty scheme, industry experts opined.

There are several slum rehabilitation schemes stalled in Mumbai and suburban areas for several years, and there is no progress at all.

The government has noticed that many financial institutions have granted finance to slum rehabilitation schemes and in spite of the finance, the concerned developers have failed to complete the rehabilitation component in the schemes and also failed to pay the transit rent to eligible slum dwellers.

There is no progress in such slum rehabilitation schemes and the financial institutions are also sustaining huge losses owing to the failure of developers.

These financial institutions are not on record of slum rehabilitation authority and because of that the SRA is not in a position to allow these financial institutions to complete the project, though they are willing to complete the same.

Prior to this, the state government has taken various decisions and granted concessions in order to motivate the developers and societies to take necessary steps for completion of these schemes.

The outbreak of Covid19 pandemic, non-availability of sufficient funds with developers and overall slowdown of economy are among the major factors for such delay in implementation of schemes. The government has considered all these aspects and has decided to implement the amnesty scheme.

Source: realty.economictimes.indiatimes.com

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