Housing and Urban Development Corp has floated a special loan scheme for rehabilitation efforts in the states affected by the devastating tsunami waves, setting aside a fund of Rs 2000 crore (Rs 20 billion) for lending at a rate of 6.5 per cent.

This is the largest amount proposed by HUDCO so far for disaster mitigation.

Tsunami: Waves of destruction

The loan scheme has been floated with immediate effect for repairs, retrofitting and reconstruction of new houses for the economically weaker sections at a subsidised rate of 6.5 per cent as against the 7.5 per cent presently applicable for EWS schemes, Minister of Urban Employment and Poverty Alleviation Kumari Shelja announced in New Delhi on Tuesday.

"I have written to the chief ministers of the affected states as also the Lt Governor of the Andaman & Nicobar Islands informing them about the loan scheme," Shelja said.

The minister said she has also directed HUDCO that efforts should be made to use locally available materials and technical know-how.