Assessing Credit Options for Household Sanitation in Urban Areas

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Swachh Bharat Mission (SBM) for urban areas of the Government of India has put an emphasis on
access to sanitation in urban areas. Under this, the Government of Maharashtra has initiated its Swachh Maharashtra Mission for Urban Areas. The partial incentive subsidy provided under these missions is only 25% of the cost of a toilet in urban areas. With a demand based model adopted in Maharashtra access to household credit becomes important in realizing the SBM and SMM objectives of universal access to toilets and open defecation free cities. Though microfinance institutions have generally taken lead in sanitation credit, it can also be provided by several other financing institutions in urban India such as banks, cooperative sector, and housing finance institutions. This paper provides highlights of credit options available for households in general and in the two project cities in Maharashtra. It also discusses the options for achieving scale, including strategies ranging from initial origination support to specific FIs to better implementation of policies such as sanitation in priority sector lending by the Reserve Bank of India.