Leader of the Opposition Devendra Fadnavis on Thursday met Reserve Bank of India (RBI) governor Shaktikanta Das and urged him to allow District Central Cooperative Bank Limited (DCCBL) to finance self-redevelopment housing cooperative projects.
The former Maharashtra chief minister also submitted a detailed note to the RBI governor, explaining how financial support from DCCBL would play a significant role in boosting redevelopment of cooperative housing societies across Mumbai and its suburbs that are in a shambles for several decades, endangering the lives of its residents.
In 2019, the scheme, conceptualized by the Fadnavis government, was passed in the cabinet. A high-powered committee was constituted to study and make recommendations on concessions in the scheme. After weighing all aspects, the then BJP government had allowed DCCBL to finance the redevelopment of cooperative housing projects.
However, in September 2020, the RBI issued a circular, stating that no district cooperative banks can finance self-redevelopment housing projects as it falls under the purview of commercial real estate and goes against the loan policy. The RBI conveyed its decision to Maharashtra State Cooperative Bank, which is the guardian of all district central cooperative banks. The funding stopped following the RBI move.
Fadnavis on Thursday said, “I have requested the RBI governor to allow DCCBL to provide loans to self-redevelopment housing cooperative societies. The RBI should keep self-redevelopment projects out of the purview of commercial real estate and ensure that the scheme’s objectives are fulfilled to benefit people.”
The scheme would allow the residents of such dilapidated buildings to renovate their houses. Total 5,800 projects are yet to be completed. Majority of these are ramshackle structures housing senior citizens. A lot of buildings in the urban areas also need urgent renovation. As per the conventional method, redevelopment of an existing housing societies consists of the society in lieu of additional floor space index under the development control rules. In this system, a developer can additionally built housing units to cover his costs and earn profit.
But often developers cause delay or leave projects incomplete without repaying rent. Therefore, people are reluctant to renovate their housing societies.
“During our tenure, we had addressed this problem by allowing MDCCB to finance self-redevelopment of housing cooperative societies on government, semi-government and private land. All concerned agencies, including Maharashtra Housing and Area Development Authority (MHADA) and the Mumbai and Greater Mumbai Corporation were involved and their consent sought,” Fadnavis said. The high-powered committee had included various concessions, such as interest subsidies, single-window clearances, additional floor space indexes, GST waiver, stamp duty of only Rs 1,000 to registered member of a flat and three years completion period among others, in the scheme.
Under the scheme, the government can also earn up to 30 to 40 per cent revenue off the project cost through taxes, duties and premium. The MHADA and the Brihanmumbai Municipal Corporation (BMC) considered implementing this scheme.
After promulgation of the government resolution in 2019, several housing societies went for these schemes. The work is in progress. The Opposition believes that the RBI’s decision would adversely affect their housing project. “If private banks are allowed to finance housing projects, why is the RBI not considering DCCBL?” asked Fadnavis asked.
Fadnavis was quoted stating the RBI: “The regulator needs to consider that DCCBL is facing cut-throat competition from commercial and private banks, and this decision will further corner them as far as garnering sizeable portion of the lending business is concerned.”
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