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CASE STUDIES
and Gopalpur could only to procedural bottlenecks, households relied on multiple
benefit after the government thus keeping many otherwise sources of borrowing instead
decided to provide Land eligible beneficiaries outside of one, whether a combination
Right Certificates (LRCs) to the purview of the scheme. of formal and informal or
the slum dwellers (Box 1). As Therefore, if the process a combination of multiple
per Figure 7, it was observed of land transfer is not informal sources. It is well
that in Gopalpur, among streamlined for the slum known that informal credit
the beneficiaries who had dwellers, they will keep markets often display patterns
received LRC, 97 per cent of falling out of the purview of and features that are not
them had applied for BLC. these housing schemes, which commonly found in informal
In Dhenkanal, however, it in turn has the potential to structures. These include
is seen that only 4 percent hinder achieving the target the advancement of loans
of the total LRC recipients of housing for all in the states based on oral agreements
had applied for BLC. This as well as for the national rather than written contracts,
can be explained by the fact government as a whole. with limited to no collateral,
that in Dhenkanal, the LRC long-term exclusive
distribution has just begun. Disproportionate reliance relationships, and repeat
on informal borrowings to
The field survey also revealed finance construction lending with significant inter-
the willingness among the linkages with other markets
beneficiaries to apply for BLC beneficiaries had to such as material, labour,
BLC and the requirement borrow to finance their house transportation, etc. However,
of reapplication in some construction, albeit they such informality is often
cases, as the applications had borrowed from informal associated with significantly
initially been rejected because sources in most cases. Only high-interest rates because
of the lack of land ownership Odisha had a relatively lower of the high risk associated
evidence (Das, et al., 2020). level of borrowings, at 49 per with this sort of lending. BLC
cent. The remaining half of beneficiaries reported not
Further, in smaller cities, the beneficiaries in the states borrowing from the banks
the slum dwellers are not complemented the subsidies due to excessive documentary
necessarily encroachers with their income and savings. and collateral requirements,
(Das & Mukherjee, 2018). Interestingly, in the majority perceived high-interest rates,
However, as various unserved of the cases across the states, and inability to pay the
rural pockets get in-situ
urbanised, many informal
settlers reside on their own Figure 8: Sources of borrowing
land with/without services,
in dilapidated housing
conditions, and without Relative/Friends 28% 40%
Money lender
adequate documentation. Bank 17%
Moreover, given that India’s Micro Fin Institution 4% 6%
Other
land and property records Cooperative Bank 3%
are in a dismal state, slum- Employer 2%
dwellers do not possess NBFC 1%
valid legal documents due
56 HUDCO-HSMI Publication Informal Loans Formal Loans
80
70
60
50
40
30
20
10
0
0% 20% 40% 60% 80% 100%
