Defaulted maintenance payments: co-op dept proposes interest cut

The state cooperation department has proposed reduction in maximum interest rate on defaulted payment of maintenance by tenants of housing societies.

An official from the housing society registration office in Mumbai said that while the present maximum interest rate imposed on defaulters for delayed payment of maintenance by a housing society is 21 per cent, the state is contemplating bringing it down to 15 per cent. The official said that the proposal has been sent to the law and judiciary department recently. Once approved, rules of the Maharashtra Cooperative Societies Act 1960 will be amended. A notification soon will be issued seeking suggestions and objection from citizens,  the official said.  The proposal to reduce the maximum interest rate on delayed payment of maintenance aims to alleviate some financial pressure on tenants and give them more flexibility in managing their expenses.

By reducing the interest rate to 15 per cent, it is expected that tenants will catch up on overdue payments easily, without facing  penalties, and will address concerns of tenants contributing to  smoother functioning of housing societies.  Additionally, reduction in interest rate is also in line with the current trend of lower interest rates offered by banks, the official said.

However,  Maharashtra Societies Welfare Association chairman Ramesh Prabhu said reduced interest rate will increase number of defaulters. He said, “Housing societies charge simple interest so defaulters, who may have taken loans from elsewhere will make payments where interest rate is more, and society’s payment will suffer.”