Pune: Government’s Promised Subsidy for Redevelopment Hits a Roadblock, Societies Await Clarity

Tikam Shekhawat

Pune, 6th February 2024: The Maharashtra state government’s announcement to grant a four percent interest rate subsidy on loans for redevelopment by the State Cooperative Bank for housing societies seeking self-redevelopment has hit a snag. Despite the announcement made over a year ago, the government has not issued an order to implement the subsidy, leaving housing societies in Pune, Mumbai, and across the state in a lurch.

Many society buildings have surpassed the 60-year mark, highlighting the need for financial support in their self-redevelopment endeavors. However, the policy constraints of the Reserve Bank and NABARD made it challenging for such societies to secure loans through cooperative banks. To address this, the Reserve Bank issued a circular on June 8, 2022, allowing State and District Co-operative Banks to provide loans at five percent of their total assets.

Despite the circular, the awaited government order has not been issued, stalling the redevelopment plans of numerous societies.

Deputy Chief Minister Devendra Fadnavis unveiled the State Co-operative Bank’s Redevelopment Loan Policy at a Housing Societies Conference in Mumbai last July. During this announcement, he pledged a four percent interest subsidy on loans for societies engaging in self-sufficient redevelopment. The State Co-operative Bank was designated as the ‘nodal agency’ for this initiative, offering societies the prospect of obtaining loans at a minimal five percent interest rate.

However, a year has passed since the announcement, and the lack of a government order has halted the redevelopment projects of these societies.

Current Status in the State:

– 2,23,000 Cooperative Societies

– 1,20,540 Cooperative Housing Societies

– 85% of Housing Societies in Pune, Mumbai, Thane

– 30-40% of societies expressing interest in redevelopment

– 18,000 Apartments in Pune

– 20,000 Housing Societies in Pune

Banks presently offer loans at a concessional rate of nine percent to societies pursuing self-sufficient redevelopment. The state government’s additional four percent subsidy, however, awaits implementation.