The RBI's new notification provides assistance to self-development housing societies

After two years, the Reserve Bank of India (RBI) lifted restrictions on state and district co-operative banks issuing loans for self-development in a new notification issued on Wednesday. The RBI had restricted these banks' ability to finance such projects until October 2020.

 

According to Abhishek Ghosalkar, director of Mumbai District Central Cooperative (MDCC) Bank, the relief for funding self-development could be achieved due to constant follow-up by the Mumbai Bank, Maharashtra Societies Welfare Association (MahaSEWA), and him. "The district centre co-operative bank and state co-operative banks are now permitted to grant finance to commercial real estate residential housing within the existing aggregate housing finance limit of 5% of total asset."

 

"The notification will primarily benefit cooperative housing societies that choose self-development," he said. Ghosalkar believes that self-development is the best option for housing societies where projects have been stalled due to the default of several developers. "It provides maximum security to members, less litigation, and additional benefits in the form of additional area and corpus above and beyond what a developer offers," he explained.

 

The Mumbai Suburban District Federation has established a separate free advisory cell to assist housing societies interested in self-development until the OC is obtained. On September 13, 2019, the previous BJP-Shiv Sena government issued a government resolution to promote the self-development of cooperative housing societies in a big way.

 

It had designated Maharashtra State Co-operative Bank as the nodal bank to coordinate with the MDCC. Following this, the MSC Bank wrote to the RBI and the National Bank for Agriculture and Rural Development (NABARD) in October 2019 requesting permission to fund self-redevelopment projects of registered cooperative housing societies by keeping such loans outside the purview of the "commercial real estate," which was denied.

 

 

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