Boost for self-redevelopment: Societies can now take housing finance loans – ET RealEstate

MUMBAI: In a major boost to self-redevelopment of cooperative housing societies, the Reserve Bank of India (RBI) has included them in the list of allowed borrowers for housing finance loan.

This is for the first time that cooperative housing societies have been allowed to borrow from housing finance companies (HFCs). Earlier, societies in Mumbai could obtain loan for self-redevelopment only from the Mumbai District Co-operative Bank.

In a master direction issued last month the RBI said, “Housing finance shall mean financing for purchase/construction/reconstruction/renovati-on/repairs of residential dwelling units which includes loans to individuals or group of individuals including co-operative societies for construction/purchase of new dwelling unit.”

Activist Chandrashekhar Prabhu said it is good news as it would encourage more societies to take up self-redevelopment. “There are 150 HFCs registered with the RBI many of whom have loaned to builders who have defaulted and these companies have lost money. It would be safer for them to lend to housing societies. HFCs can take money from National Housing Bank and disburse this to housing societies,” he said.

Prabhu said that he would urge the RBI to further allow nationalised and private banks to lend directly to cooperative societies for self-redevelopment. “Today, no rule stops banks from loaning to housing societies, but the problem is that in case of default who will be responsible. The government seems apprehensive about these societies when they are the safest to lend to as they are middle-class people and will not default,” he added.

Scarcity of open land means that Mumbai can now develop only through redevelopment. The current template of developer-led redevelopment is a failure, often not delivering the promised homes, and definitely not in the volumes required. Self-redevelopment appears to be the panacea. The authorities must tweak the financial ecosystems to align to this new reality.TimesView

But Salil Rameshchandra, president, Federation of Grantees of Government Land, said the RBI needs to do more. “Many societies are in need of redevelopment, as their plot size is small, no builder is interested. The RBI must prepare guidelines on how non-banking finance companies (NBFC), HFCs and all banks can provide support to such societies.” On the likelihood of societies defaulting on repayment, Rameschandra said it is very unlikely as residents would be the biggest losers if they do not redevelop in time. “The norms for housing societies need to be more relaxed than what they are for builders. The RBI needs to look at the changing housing scenario and make guidelines accordingly,” he suggested.

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Raipur: Debt recovery tribunal quashes PNB housing’s notice to home buyer – ET RealEstate

RAIPUR: In a significant order providing relief to a person who faced financial crisis during lockdown, the debts recovery tribunal has quashed the notice issued by public sector bank’s housing finance company, allowed the applicant to deposit the remaining amount and issue sale certificate and handover possession of property purchased through e-auction.

Kamlesh Verma, a resident of Shanti Nagar colony, had filed an application under Securitization and reconstruction of financial assets and enforcement of security interest Act (SARFAESAI) 2002 for quashing the notice issued to him by PNB Housing Finance forfeiting his deposit and seeking other reliefs.

Applicant’s counsels Nirnay Gupta and Shreyas Dubey said Verma had participated in the e-auction for purchase of an immovable property in Raipur district and was declared successful for bidding at a price of Rs 9.60 lakh. The applicant had deposited Rs 96,000 pre-requisite earnest money for participating in the bidding process. The PNB housing finance granted him 15 days’ time to deposit the remaining amount of the reserved price and the applicant deposited the second instalment of Rs two lakh on May five this year.

During the argument before the debt recovery tribunal Jabalpur, which had its sitting at Cuttack, applicant’s counsels argued that due to the pandemic spread all over the world and lockdown being departed throughout the nation, the financial health of the applicant became sensitive and he could not overcome the financial burdens because of continuous lockdown and loss of business. Hence, the applicant persistently requested PNB housing to grant a few months’ time to deposit the remaining amount to get the physical possession of immovable property and sale deed registered in his name.

However, the housing finance company on June 30 issued a forfeiture letter and informed the applicant regarding the deficiency in full payment along with re-auctioning of the secured asset, according to the order. Later, the applicant approached the tribunal alleging that the housing finance company went ahead for re-auction despite his willingness to pay the remaining amount.

After hearing both the parties, the debt recovery tribunal presiding officer P Ravi Kiran passed an order noting the submission of the applicant that he could not deposit the amount due to CoVID-19 pandemic situation and his willingness to pay the balance amount.” If the applicant has not paid in time 25 per cent of sale confirmation amount within the stipulated period, it was the duty of the financial institution to issue forfeiture letter but the financial institution issued such a letter only after receipt of Rs 2 lakh and after three months 10 days of auction which is not permissible under the law”, the order said.

The tribunal quashed the notice and letter of the financial institution and directed PNB housing finance to allow the applicant to deposit the balance amount of Rs 6.64 lakh within 30 days, issue sale certificate and handover possession of immovable property within 15 days from the date of deposit of the amount.

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