Union Bank to provide loans for low cost housing scheme for slums

Union Bank of India the public sector will be providing loans towards the beneficiary contribution in the low cost housing loan scheme planned for the urban poor in Bhubaneswar and Puri.

Under the low cost housing scheme project the houses will be built for the slum dwellers in these two cities under the Integrated Housing and Slum Development Program (IHSDP) being executed in Bhubaneswar and Puri municipality. Under the scheme, the Union government will be providing 80 percent of the project cost as grant and the remaining 20 percent will be shared equally by the state government and the beneficiaries. The Union Bank will be giving loan to the beneficiaries towards meeting their contribution in the project, if the beneficiaries want it.

A senior bank official informed that bank will be giving loan to the urban poor and slum dwellers under JNURM at 4 percent differential rate of interest (DRI).

A Sudhakar, DGM, Union Bank in an interview told the Business Standard "We have in principle agreed to provide loans for the low cost housing project under IHSDP for urban poor and slum dwellers being implemented by the Bhuabneswar and Puri municipalities. It is in the initial stage and we are working out the modalities for the proposed initiative".

He said, the bank will give loan at 4 percent rate of interest for construction of houses in these two municipalities.

However the state government will be looking after the activities like identification of the land, preparing the list of beneficiaries, inviting the bid and construction of houses, banks role will be limit to of providing required loan for the beneficiaries.

The beneficiary will have to pay back the loan to the bank within a set time frame of not exceeding 10 years and the bank will be keep the house mortgaged till the loan is cleared.

The bank will file the request for the approval from its corporate head office after the project details of the scheme are obtained from the state government.

Orissa will be the second state after neighboring West Bengal where the bank is extending loans for a housing scheme for the urban slum dwellers. Earlier bank has supported a similar project in Durgapur in West Bengal in the beginning of the current fiscal.

The progress seems to be important as the state government has received the signal from the Union government that the number of houses projected under IHSDP is most likely to increase substantially this year from about 11,000 last year.