MUMBAI: With Reserve Bank of India (RBI) seeking to amend laws with regard to housing finance companies, activists are demanding that the central bank enable easing financing of self-redevelopment projects.

“Mumbai has a large number of old and dilapidated buildings, both in the island city and suburbs. These need to be redeveloped urgently. Developers are in no position to take up these projects. The RBI must enable redevelopment by mandating that housing finance firms reserve at least 5-10% of their corpus as loans for self-redevelopment projects,” said Salil Rameshchandra, president, Federation of Grantees of Government Lands.

He added that at present it is difficult for housing societies to raise loans for self redevelopment as they do not have much capital. “Land must be accepted as capital.”

Suyog Seth, executive committee member of Pracitising Engineers, Architects and Town Planners Association, said RBI must nudge banks to lend for self-redevelopment and rental housing projects. At present, only Mumbai District Central Co-operative Bank provides loans for self-redevelopment.

The RBI has invited suggestions/objections from the public by July 15 for defining the term “providing finance for housing” or “housing finance”. “In general parlance it can be treated as providing finance for residential housing purpose and should not ideally include finance for commercial real estate,” stated the RBI. It has now included 11 different entities that can be classified as providing finance to individuals, cooperative societies, public agencies like state housing boards, corporates, government agencies, for improving conditions in slum areas, extending credit directly to slum-dwellers on the guarantee of the government or indirectly through the state governments. Also, financing construction of educational, health, social, cultural or other institutions. The financing would be for purchasing/construction/reconstruction/renovation/repairs of residential units.

Advocate Godfrey Pimenta said there are several stalled housing projects in the city and the RBI must include these for providing loans. “It must insist on an end use certificate and for a monthly report so that funds are not diverted or misused which is often the case today,” he said.

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