1. Land Tenure, Services & Finance in Informal Settlements Case Study from Bhopal, India Arkaja Singh 24 March, 2014, Washington DC

2. icfi.com | ghkint.com Institutions and Informality  How institutions relate to informality is conditioned by law and regulations –Some can, and some cannot –Relation may depend on what kind of informal –There are state-sanctioned regimes that deal with informality  Slums are a “special regime” –Not clearly defined or well understood –Contours of special regime differ even within the country –Better informed policy and programme design

3. icfi.com | ghkint.com Case Study in Bhopal, India The City Corporation (Bhopal Municipal Corporation) ) Water, sewerage, solid waste collection Typology of Informal Settlements Housing Finance Law (mortgage, banking regulation ) Informal, non-mortgage finance?

4. icfi.com | ghkint.com Informality of Tenure & Planning Status  Who owns the property? –Do residents have freehold, leasehold or right to occupy? –Can residents provide documentation and evidence of rights in relation to property? –Power of attorney sales unregistered, do not pass title  Planning status –Land use status Permission for “diversion” of farm land Notified in the master plan for another use? –Permission for development and sub-division –Recognised for infrastructure plans –Is it possible to get building approval? (linked to Housing Fin.) Retrospective Ratification, some rules not so clear, some rules not enforced

5. icfi.com | ghkint.com Typology of settlements Slums Squatter settlements on land vested in State Gov Notified under Slum Act Not notified but identified by administration as slums May have partial tenure under MP Patta Act No right to mortgage and planning status unclear Illegal Colonies Illegal Residential Developments Farms sub-divided and developed without planning permission Poorer than legal gated communities, but serve several income categories Under MP Land Revenue Code, no legal title transfers in this type of sale No approvals for any type of building unless regularised New unlisted settlements become recognised; illegal colonies can be regularised

6. icfi.com | ghkint.com Typology of settlements Old city/ village areas Tenure documentation and boundaries are unclear Pattern of settlement difficult to service Planning status unclear Local tenure exceptions Old Waqf endowments have no owner, residents have no title Bhopal Gas affected areas – no clarity on rehab, settlements remain and provided services Slums on private land, forest land, railways and other government agency lands No tenure, no planning status No possibility of future tenure regularisation

7. icfi.com | ghkint.com City Corporation services  Legal bar on illegal colonies → Regularisation and payment of fee to BMC  No services on private land, govt agency land, forest land –But principle not applied to waqf settlements  Notified slums can be provided services regardless of tenure, but not non-notified slums –Settlement level recognition –Households may or may not have patta  Very minimal BMC services provided everywhere –Water tankers, bore wells, public taps even in non-notified slums –Minimal waste removal services occasionally cover unserved areas

8. icfi.com | ghkint.com Property tax registration for BMC services  Basis for BMC recognition (in administrative practice) –Property tax papers required for water connection application Plus personal identification documents, evidence of residence –No legal reason why this is linked, except to increase tax coverage –But tax recovery from the poor is minimal ‘consolidated tax’ for sanitation So is it mainly a device to provide services in slums?  Sewerage & waste collection should cover all rate- payers –Except illegal colonies –Actual coverage is much lower –‘Right to services’ is limited & not outside constitutional courts

9. icfi.com | ghkint.com BMC institutional challenges  Service networks inadequate everywhere in the city –Distribution networks leaky, untreated borewell water in places –Sewerage networks c. 10% –SWM less dependant on infra, but door to door collection limited –New investments in infra, impact on services uncertain  Planning for infrastructure typically excludes informal settlements –Inter-connection to trunk lines may not be possible –Even where trunk lines pass by, connection may require ‘special mediation’ Representation through ward councillors Residents lobby the system International donors (DFID, ADB)  BMC not entirely clear about service connections in informal settlements –Officials have different versions –Mentality of rationing for scare resources remains

10. icfi.com | ghkint.com Housing Finance in Informal Settlements? Housing Finance Companies, Banks Regulated by national banking regulator (RBI), national housing bank Mortgageable title? Tenure grants in slums not mortgageble Not mortgageable if tenure not documented, not enforceable Applicant should have building approval Not in slums, illegal colonies, old settlements or local tenure categories BMC efforts to facilitate HF succeed only in new-built housing Flexible building regulation to suit crowded, untidy settlements? Tenure documentation programmes? Informal lenders to fill up this vacuum? Small incremental loans for house improvement Housing in notified slums is of good built quality Micro-finance companies?

11. icfi.com | ghkint.com Special Regimes OK for services, not strong enough for finance?  ‘Special regimes’ for BMC services –Settlement level recognition –Property tax registration –Other ad hoc exceptions Waqf, international aid –However, access to services is still difficult  What would a special regime for housing finance institutions look like? –Govt holds back on full tenure regularisation –National banking regulations not likely to change –Is non-mortgage lending the best option?

12. icfi.com | ghkint.com