‘Move to allow district, state co-op banks to fund self-redevelopment welcome'

The RBIrsquos June 8 announcement allowing district and state cooperative banks to use 5 per cent of their total commercial real estate asset for selfredevelopment will come as a boon for thousands of stalled projects Real estate experts have welcomed the decision and said selfredevelopment provides maximum security to the members less litigation and provides additional benefits to the members in the form of additional area additional corpus over and above what the developer offersmidday in its article on April 30 had highlighted the pros and cons of selfredevelopmentAdvocate Shreeprasad Parab director at Maharashtra State Housing Federation Ltd said ldquoSelfredevelopment is the fulfilment of the dream of affordable housing by means of sharing the developerrsquos profit among all the members and also providing flats at cheaper rate The biggest hurdle of selfredevelopment was getting the funds required to develop the property With the Reserve Bank of Indiarsquos decision this has become easierrdquoldquoHousing societies willing to undertake selfredevelopment should be prepared with the following compliancesmdashget the conveyance of the property executed feasibility report of the plot to ascertain plot potential check the validity of the tenure of the managing committee and update the records of the society as per the provisions of lawrdquo said ParabLess litigation better profitldquoThe Maharashtra State Cooperative Bank has invited us the federation for framing the policy We will insist that they fund selfredevelopment projects from the start from the stage of receiving Intimation of Disapproval If this is accepted we expect around 85 to 90 per cent of the cost will be financed and the remaining will have to be funded by the societyrdquo he said Chartered Accountant Ramesh Prabhu founder chairman of Maharashtra Societies Welfare Association said ldquoConsidering the number of stalled redevelopment projects in the Mumbai Metropolitan Region cooperative housing societies were looking for an option for redevelopment with least litigation and the assurance of getting the project completed Selfredevelopment emerged as the best option where the societies appoint the architect to get the plan passed and the contractor to complete the project at fixed rate or on barter system However societies were also looking for bridge finance till the project is completed and Occupancy Certificate is obtainedrdquoNearly 3000 unregistered projects and nearly 2500 RERA registered projects are stalled in MMR while hardly 25 to 30 societies have opted for selfredevelopmentThe journey for fundsldquoMumbai District Central Cooperative Bank and Maharashtra State Cooperative Bank used to give loans to their member societies for major repairs by mortgaging the land Now since societies are planning redevelopment Mumbai bank decided to lend funds for the same Considering this the state government on September 13 2019 issued a notification declaring Maharashtra State Cooperative Bank as a nodal agency to grant funding for selfredevelopment Accordingly the bank sought permission from RBI in September 2019 but RBI denied itrdquo explained PrabhuldquoAfter constant follow up by MahSeEWA and the federation and Mumbai banks now RBI by notification dated June 8 2022 allowed the district and state cooperative bank to lend for commercial real estate residential housing projects This means now all district banks and Maharashtra State Cooperative Bank may fund upto 5 per cent of the total assets for selfredevelopment Considering the needs of the customers individual housing loans for tierI cooperative banks have been enhanced from Rs 30 lakh to Rs 60 lakh and for tierII cooperative banks from Rs 70 lakh to Rs 140 lakhrdquo he added