MUMBAI: In order to significantly boost the self-development of the cooperative housing associations, the Reserve Bank of India (RBI) has added them to the list of approved borrowers for home finance loans.
This is the first time cooperative housing associations have been allowed to borrow from home finance companies (HFCs). In the past, companies in Mumbai could only obtain a self-rehabilitation loan from the Mumbai District Co-operative Bank.
The scarcity of open land means that Mumbai can only develop through redevelopment. The current template for developer-led redevelopment is a bug that often fails to deliver the homes promised and definitely not in the required quantities. Self development seems to be the panacea. Authorities need to optimize financial ecosystems to adapt to this new reality.
In a master’s statement issued last month, the RBI said, “Housing finance means funding for the purchase / construction / reconstruction / renovation / repair of housing units, including loans to individuals or groups of individuals including cooperatives for the construction / purchase of a new one Residential unit. ”
Activist Chandrashekhar Prabhu said it was good news as it would encourage more societies to re-develop themselves. “There are 150 HFCs registered with the RBI, many of which have lent to construction companies that have defaulted, and those companies have lost money. It would be safer for them to lend to housing associations. HFCs can take money from the National Housing Bank and pay it out to housing associations, ”he said.
Prabhu said he would urge the RBI to continue allowing nationalized and private banks to lend directly to self-development co-operatives. “Today, no rule prevents banks from lending to housing associations, but the problem is that if they default, those responsible are responsible. The government appears to be concerned about these companies when they are safest to borrow as they are bourgeois people and will not default, ”he added.
But Salil Rameshchandra, president of the ruling country’s Federation of Scholarship Holders, said the RBI had to do more. “Many companies have to be redeveloped because their property is small and no building contractor is interested. The RBI needs to develop guidelines on how non-bank financial corporations (NBFC), HFCs and all banks can support such companies. ”
Regarding the likelihood of societies defaulting on repayments, Rameschandra said it was very unlikely as residents would be the biggest losers if they did not re-develop in time. “The norms for housing associations have to be more relaxed than those for building owners. The RBI has to deal with the changing housing scenario and establish appropriate guidelines, ”he suggested.