Stress fund is not a bank guarantee: Slum Redevelopment Authority

Mumbai: To provide financial support for the city's stalled slum redevelopment projects, the Slum Redevelopment Authority (SRA) has made a proposal of provision of 'stress fund' to the state government. However, approval from the cabinet on same is yet to be obtained.

According to an SRA official, once the proposal is approved, the stress fund will be reserved in the specific bank only which will offer loan to developers undertaking such redevelopment project.

He explained, "However the funds kept in bank should be categorised as 'deposits' and not 'guarantee.' This means, if at all the developer of a said project becomes insolvent, the bank won't be able to recover the money out of the stress fund. Since the bank will be giving loan for the development project and they will be charging rate of interest on it, the stress funds should remain untouched."

The condition will be put with bank in order to protect the public money which will be used to facilitate finance to stalled slum redevelopment projects. As an initial plan, Rs 500 crore will be taken from Shiv Shahi Punarvasan Prakalp and another Rs 500 crore from SRA. So total Rs 1,000 crore will be deposited as stress fund, said the official.

According to the records with SRA, majority of the slum redevelopment projects are affected due to lack of finance. In Mumbai, there are about 260 slum redevelopment projects stuck due to no money from past several years.

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Free Press Journal