The public sector Union Bank of India has agreed to provide loans towards the beneficiary contribution in the low cost housing scheme planned for the urban poor in Bhubaneswar and Puri.
These low cost houses are proposed for the slum dwellers in these two cities under the Integrated Housing and Slum Development Programme (IHSDP) being implemented in Bhubaneswar and Puri municipality. Under the scheme, the Union government is providing 80 percent of the project cost as grant and the remaining 20 percent is shared equally by the state government and the beneficiaries. The Union Bank will provide loan to the beneficiaries towards meeting their contribution in the project, if the beneficiaries want it.
This loan will be provided to the urban poor and slum dwellers under JNURM at 4 percent differential rate of interest (DRI), a senior official of the bank said.
"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", A Sudhakar, DGM, Union Bank told Business Standard.
He said, the bank will provide loan for construction of houses in these two municipalities at 4 percent rate of interest.
While the state government will take up activities like identification of the land, preparing the list of beneficiaries, inviting the bid and construction of houses, the role of bank will be confined to extending the required loan for the beneficiaries.
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The beneficiary will have to pay back the loan taken to the bank within a time frame of not exceeding 10 years and the house will remain mortgaged with the bank till the loan is cleared.
The bank will seek the approval of its corporate head office after the project details of the scheme are obtained from the state government.
Orissa will be the second state after neighbouring West Bengal where the bank will extend loans for a housing scheme for the urban slum dwellers. The bank supported a simililar project in Durgapur in West Bengal during the beginning of the current fiscal.
The move assumes importance as the state government has received the indications from the Union government that the number of houses that is proposed to be taken up under IHSDP is most likely to increase substantially this year from about 11,000 last year.