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Cooperative housing sector at a crossroads
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The cooperative housing sector has helped build lakhs of houses in Kerala. However, it is in need of a fresh impetus, given that its scope can be considerably enlarge.
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The cooperative movement has come to embrace economic and development activities in Kerala in such a way that it would be difficult to imagine a modern Kerala without the 25,000 cooperatives of varying nature. For nearly a century, they have woven their own webs of economic and social relationships to give the concept of social networking an entirely new dimension.
Data from the Reserve Bank of India for 2005 showed that there were 1.11 crore members in Kerala’s 1,628 primary cooperative agriculture credit societies. The average number of people availing loans from a cooperative society in Kerala is 6,294, a national high. Similarly, the State is ahead of others in the country in terms of both loans availed from and deposits in primary cooperative agriculture lending societies.
Housing sector
The cooperative housing sector in the State, however, appears to have lost a bit of its sheen over the years though the Kerala State Cooperative Housing Federation Limited (Housefed), the apex body for the cooperative housing sector, has operated without incurring any loss since it was established in 1970.
Housefed came into existence with a capital base of Rs.2.27 lakh and with the aim of helping ordinary people build their houses. The federation has been channelising money from agencies like Life Insurance Corporation, Housing and Urban Development Corporation and National Housing Bank through primary housing societies.
Though there are around 300 cooperative housing societies in the State, 207 are affiliated to the federation, said O. P. Moideen, President of Housefed. The federation, he said, expected to disburse about Rs.100 crore during the current financial year.
Mr. Moideen said that Housefed is the only agency that has been funding housing for the economically weaker sections of society. People in the economically weaker sections get a loan up to Rs.50,000 at a lower interest rate. Between 20 and 25 per cent of the total loans from the federation goes to the economically weaker sections. The role being played by the federation and the housing cooperatives at the grassroots level is important considering that there is serious shortage of housing in the State.
Housing need
According to Planning Board data, the total housing need in the State is to the tune of one million, including the numerical shortage of 0.63 lakh and 5.38 lakh houses that are in disrepair. The expected new demand is four lakhs.
According to Mr. Moideen, Housefed has helped build between 2.5 and three lakh houses in the State since its inception. And, in a paper presented by him at the recent 6th Cooperative Congress, Mr. Moideen observed that about 11 per cent of the houses being built in the country came up with help from the cooperative sector.
However, there are serious problems straddling the cooperative housing movement. Limited loan sources for the cooperative housing sector is one. Even the cooperative societies and cooperative banks have not given cooperative housing societies their due, feels M. M. Hassan, a Minister in the former UDF Government and who was Housefed President for over 20 years.
Tamil Nadu model
He said that States such as Tamil Nadu had given considerable importance to the cooperative housing societies. Tamil Nadu even has a separate registrar for cooperative housing societies and all housing projects sponsored by the Government go through these societies, he said. If a similar approach is adopted by the State Government, it would be possible to raise the number of primary cooperative housing societies to more than 1,000 and loans from various agencies can be channelised in a centralised manner, he added.
According to Mr. Moideen, one of the more serious problems facing the cooperative housing sector is the mounting arrears on the part of the primary societies. On the one hand, the problems facing agriculture adversely affect the primary cooperatives. On the other, issues related to one-time settlement of dues have given rise to wrong impressions among those who have availed loans from these societies. Another factor that is affecting repayment is the rising cost of building materials. The cost of building a house has gone up significantly over the years while incomes have not grown proportionately. This has hit repayment capacities in a big way.
Mr. Moideen said in his presentation that since a housing loan was once-in-a-life-time affair, members tend to lose interest in helping the societies grow. Most of the members tend to limit their society activity to just attending meetings.
New approach
Taking these difficulties into consideration, Housefed is reorienting its approach to the housing problems in the State, said Mr. Moideen. He said that there was a move on the part of the Federation to raise the loan amount. Currently, the upper ceiling for a housing project is Rs.5 lakh. It is expected to be raised to Rs.10 lakh. Besides, the federation is making efforts to see that loan applications are processed quickly in a way that the loan can be made available within 20 days or in a month, the latest.
The federation has also plans to finance commercial projects. However, this requires the sanction from the Registrar of Cooperatives. While becoming more competitive is a must for the Federation to remain in business, it has to reconsider its role in the housing sector that is now open to severe competition from nationalised and private banks as well as other financial institutions.
Encouragement
Mr. Hassan felt that the cooperative housing sector should be given more encouragement from the planning level. While there are special Plan provisions for food, housing tends to be neglected. This must change to help the cooperative housing sector move ahead. Just as food gets subsidy, housing, a primary need, should also be given sufficient subsidy, he added.
According to him, with centralisation of housing schemes in a State and disbursal of funds through the cooperative sector, cooperative housing banks can be formed over which there should be proper control. The number of cooperative housing banks can be restricted to make them viable and competitive, he added.
Mr. Moideen had said in his paper at the Cooperative Congress that spiralling price of building materials was a big setback to the housing sector as a whole.
The lending societies should take the lead in co-opting new building technology and locally available building materials.
In fact, the Housefed President is for a cooperative housing movement that will go beyond the need for a housing loan and play a bigger role in ensuring the quality of life of the people whom these societies serve.
K.A. MARTIN
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