At least seven people died and dozens were feared trapped when a building collapsed in India's financial capital of Mumbai Thursday, after days of heavy rain swamped the city.

Rescuers using diggers sifted through the remains of the four-storey residential building which gave way around 08:40am in the densely populated area of Bhendi Bazaar.

It was the latest deadly housing collapse to strike the teeming metropolis — shining a spotlight on poor construction standards in the Asian country — and came after heavy rains and inundations in the city killed 10 people.

An official in the control room of India's National Disaster Response Force (NDRF) said seven bodies had been pulled from the rubble and that around 30 more were still thought to be trapped.

Ambulances rushed more than a dozen injured to the nearby J.J. Hospital in the south of the city while locals joined a 43-member NDRF team in picking through piles of debris in a desperate hunt for survivors.

“Seven people have died and 15 have been brought here injured, including five who are in a critical condition,” the dean of the hospital, T.P. Lahane, told AFP.

Building collapses are common in Mumbai, especially during the monsoon season from late June to September, when heavy rains lash the western Indian city.

Severe downpours began on Tuesday and caused flooding across Mumbai and the neighbouring region of Thane.

The collapse came as officials said the death toll from the floods was expected to rise above 10, despite the waters receding after better weather.

“We are still on the lookout for more missing persons and the number may go up,” Santosh Kadam, spokesman for disaster control in Thane, told AFP.

Living in fear

Bhendi Bazaar, a scruffy colonial-era market, is one of Mumbai's most historic districts.

It is currently undergoing a $600 million redevelopment project that is set to replace hundreds of ramshackle, decades-old low-rise buildings with around a dozen glitzy new tower blocks.

Distraught residents described hearing a loud crash before rushing to the scene of the collapsed structure to try to help.

“There was a huge noise and we all came running,” Naseem Mogradia, who lives two lanes away, told AFP. Shahid Khan, 52, said he didn't know whether his friend and seven family members who lived on the ground floor were alive or dead.

“I am just trying to help with rescue operations,” he told AFP.

Mumbai has been hit by several deadly building collapses in recent years, often caused by shoddy construction, poor quality materials or ageing buildings.

Millions are forced to live in cramped, ramshackle properties because of rising real estate prices and a lack of housing for the poor.

Activists say housing societies, private owners and builders often cut corners to save on costs. They also claim that corruption plays a part with officials sometimes knowingly certifying unsound buildings in return for money.

“Most of the buildings in Bhendi Bazaar are old and dilapidated. We always live in fear that they will collapse during monsoons,” 63-year-old Mohammed Shaikh told AFP.

In July, 17 people including a three-month-old baby, died when a four-storey building gave way in the northern suburb of Ghatkopar.

In 2013, 60 people were killed when a residential block came crashing down in one of Mumbai's worst housing disasters.