The Reserve Bank of India (RBI) has informed Maharashtra State Cooperative Bank (MSCB) that no district cooperative bank (DCB) can finance self-redevelopment projects of housing societies as it comes under the ambit of ‘commercial real estate’ and is against the loan policy.
MSCB is the guardian bank of district cooperative banks. As per the directions from RBI, all DCBs should stop disbursement of loans for self-redevelopment of cooperative housing societies.
Abhishek Ghoshalkar, the director of Mumbai District Central Cooperative Bank (MDCCB), said that they would approach National Bank For Agriculture And Rural Development (NABARD) and RBI requesting them to consider ‘redevelopment loans’ to be kept outside the purview of ‘commercial real estate’.
"District co-operative banks have been very helpful in providing loans to housing societies at a really low rate of interest as compared to nationalised banks. These loans are given for self-redevelopment. The loan is given against mortgage of society papers which makes it a safe process. In Mumbai, there have been instances in the past where builders have left and projects have remained,” Ghoshalkar informed.
He further said that there have been cases where builders have stopped paying rent. Keeping such issues in mind, the Maharashtra government had promoted self-redevelopment. The resolution for the same was passed in December 2019 which included MDCCB.
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