Maharashtra Announces Stress Fund for SRA Projects

In a shot in the arm for Mumbai’s ailing real estate industry, the state government will set up a special funding window for completion of hundreds of stalled slum redevelopment projects in the city. Contending that the real estate sector was witnessing challenging times, Housing Minister Jitendra Awhad announced the setting up of a stress fund for all such Slum Rehabilitation Authority (SRA) projects. He added that the chief minister had already approved the creation of the alternate investment fund, and that his department will seek the Cabinet’s nod over the proposal in a week. Awhad said the government will invest Rs 700 crore to Rs 1,000 crore as its share in the fund’s initial corpus. “The money (for the stress fund) will be raised through state-run Shivshahi Punarvasan Prakalp Limited (SPPL), while the distribution and management of the fund will be done by a bank,” he added. More than 370 slum projects are currently stalled, while another 1,351 are at various stages of completion. Nearly 50 per cent of Mumbai residents live in slums. The government has also universalised the monthly rentals payable to slum dwellers during the construction phase. Accordingly, developers will pay a monthly rent of Rs 12,000 to slum dwellers for projects in the island city, Rs 10,000 for projects in Bandra to Andheri in the western suburbs and up to Ghatkopar in the eastern suburbs, and Rs 8,000 for those in the far-off suburbs. The bank guarantee amount stipulated for projects on private land will come down from 5 per cent of the project cost to 2 per cent. Premiums payable for clubbing of two or more projects have been reduced by 10 per cent. Awhad further announced that SRA’s intimation of approval will now be granted simultaneously with the issuance of an LOI within a week of receiving an application. Builders will no longer need to submit individual agreements with 51 per cent of slum dwellers at the LOI stage. This can be now be submitted along with the subsequent application for permit to initiate construction.