Chief Minister Manohar Joshi made the announcement today after the weekly cabinet meeting. The approval coincides with the visit of a high-level World Bank team which arrived in the city on Friday to review and assess the MUTP-II for which the state government is seeking a Rs 4200 crore loan.

``With the URCOM, we've already fulfilled most of the WB's conditions and we're hopeful of a clearance shortly,'' Principal Secretary (Urban Development) K Nalinakshan told Express Newsline.

One of the World Bank's conditions for extending the loan, which is nearly 70 per cent of the Rs 6400 crore MUTP-II was the setting up of a clutch of corporations to oversee the spending of the money. The state government has also assured the World Bank team that the MUTP-II would be completedwithin five years. The ambitious project aims at improving the city's road and suburban rail network with the addition of more trains, additional rail corridors, laying down of new tracks, building rail overbridges and procuring additional BEST buses.

The URCOM will be the agency entrusted with the job of rehabilitating the slum dwellers near railway tracks and additon of further rail corridors at a project cost of Rs 900 crore.

However, relocating the slumdwellers is a contentious issue between the state government and the Railways. The state government feels that the slums should be relocated on railway land, but the railways think otherwise.

URCOM will be a private company under the companies act, with financial institutions (FIs) like the HDFC, ALFS, Tata Housing, SBI Capital, LIC Housing Finance contributing 51 per cent.

The government will have a 49 per cent share in the corporation with bodies like the Public Works Department (PWD), Brihanmumbai Municipal Corporation (BMC), Maharashtra Housingand Area Development Authority (MHADA) and the Indian Railways.

Earlier this year, the state government signed a Memorandum of Understanding with the railways for setting up the Mumbai Rail Vikas Corporation (MRVC) which is to oversee the spending of the World Bank money. Papers for the MRVC have been put before the Union cabinet and an approval is expected shortly, said senior railway officials.

The state government then set up the Mumbai Urban Rehabilitation Programme (MURP) which will supervise all MUTP rehabilitation.

``We're looking at a tentative June 1999 date for commencement of MUTP-II,'' Nalinakshan said.

The 10-member team led by Harald Hansen of the Washington-based World bank is currently meeting heads of various government bodies like MMRDA, PWD and the Western and Central Railways. They will be in the city until October 9.

This team's visit will be followed up by another appraisal mission later this year after which the loan will be sanctioned.