Funding a housing society redevelopment project as a developer in Mumbai and Thane

Thousands of ageing co-operative housing society buildings across Mumbai and Thane are being redeveloped by developers. On paper, the model is simple: you rebuild the members' homes at your cost and earn your return by selling the extra flats. In practice, it is one of the hardest real estate projects to fund, because most of the money goes out before any sales come in.

This guide is for developers. If your society is thinking about doing the project itself, read our guide to self-redevelopment funding instead.

Why redevelopment cash flow is different

On a new project on open land, you buy the land, get approvals, register with RERA and start selling. On a redevelopment project, you take on obligations to existing members before you have anything to sell.

Stage	Typical outflows	Revenue
Tender to agreement	Tender deposits, professional fees, stamp duty and registration of the development agreement and members' PAAAs	None
Approvals	Premiums, fungible and additional FSI charges, TDR purchase, approval and scrutiny fees	None
Vacation and demolition	Monthly rent and deposit (or transit accommodation) for members, shifting costs, any corpus payable under the agreement	None
Construction	Building the rehab flats and the sale component	Bookings start once the sale component is RERA-registered
Completion	Balance construction, occupation certificate	Collections, partly locked in the RERA account

Industry commentary describes this "equity-intensive phase" — transit rent, corpus payments, statutory premiums, approval costs and professional fees — as the most underfunded part of redevelopment. Getting through it is what decides whether a project starts on time.

The rules for society redevelopment in 2026

Maharashtra's Co-operation Department sets the redevelopment procedure for housing societies through directions issued under Section 79A of the Maharashtra Co-operative Societies Act, 1960. A government order dated 30 September 2026 replaced the earlier directive of 4 July 2019 and all circulars issued under it. It applies to developer-led, self, group and cluster redevelopment. The main points:

• Eligibility. The society may decide on redevelopment if the competent authority has declared the building dilapidated, ruinous, unsafe or dangerous, and it is eligible under the development control regulations.
• Who decides. Only an elected managing committee can take the decision, not an administrator or authorised officer appointed by the Registrar.
• Quorum and vote. Special general meetings need a quorum of two-thirds of all members. Both the decision to redevelop and the choice of developer need approval from at least 51% of all members, with 51% physically present.
• Developer selection. The architect or project management consultant must prepare a project report within two months of appointment. Tenders are invited by public notice, with at least three bids sought. The selection meeting is held before a Registrar's representative and video-recorded.
• Development agreement. It must be signed within three months of selection. The general meeting decides the size and form of the developer's bank guarantee. The agreement must set completion within two years (three in exceptional cases), state members' carpet area as defined under RERA, and make development rights non-transferable.
• Rent and vacation. The developer must provide alternative accommodation, monthly rent and deposit acceptable to members, or transit camps. Permanent Alternative Accommodation Agreements (PAAAs) must be registered within three months of the development agreement. Members vacate only after all approvals are in place and their PAAAs are registered.

Separately, the Maharashtra Co-operative Societies (Amendment) Rules, 2026, notified on 18 June 2026, added a dedicated chapter for housing societies to the 1961 Rules, including redevelopment meeting procedures. The official order is in Marathi, so have your legal team check the text before relying on any summary.

Incentive FSI: DCPR 2034 in Mumbai, UDCPR in Thane

Incentive FSI decides how much sale area a project generates, so it drives both feasibility and the loan amount.

Greater Mumbai (DCPR 2034):

• 33(7) — cessed buildings in the Island City.
• 33(7)(A) — dilapidated or unsafe tenant-occupied buildings.
• 33(7)(B) — existing residential housing societies (excluding cessed buildings) where members are re-housed on the same plot. It applies to authorised buildings 30 years or older and gives incentive built-up area without premium. The base is 15% of the existing built-up area or 10 sq m per tenement, whichever is more, and the calculation has since been amended. In-situ FSI after redevelopment cannot exceed 4.
• 33(9) — cluster development, over at least 4,000 sq m in the Island City and 10,000 sq m in the suburbs, with FSI of 4 or the FSI needed for rehabilitation plus incentive, whichever is more.

Thane and the rest of Maharashtra (UDCPR): The unified regulations apply to all planning authorities except Greater Mumbai and certain others. For the Thane Municipal Corporation area, regulation 10.2.10 allows incentive FSI of 50% of the existing authorised built-up area or 15 sq m per tenement, whichever is more, for buildings over 30 years old or declared dangerous. Elsewhere under UDCPR, regulation 7.6.1 provides 30% or 15 sq m. Both give a minimum carpet area of 27.87 sq m per residential tenement.

Thane's cluster scheme runs under UDCPR's Urban Renewal Scheme (regulation 14.8), with a minimum of 10,000 sq m in non-congested areas and 4,000 sq m in congested areas. Construction has begun in Kisan Nagar. In August 2026, TMC proposed a dedicated company to execute more of its 51 urban renewal plans.

Development control regulations are amended often. Base your feasibility on the current text and your planning authority's latest circulars.

MahaRERA: registering the sale component

Members' rehab flats are not sold, but the sale component must be registered with MahaRERA. Under Order No. 28/2021, the promoter must file the society's resolution or NOC confirming its rights, the planning authority's LoI or NOC, and a valid commencement certificate for the sale component. Until those exist, you cannot launch sales.

Once you start selling, MahaRERA's three-account system applies. Buyer payments go into a collection account, and 70% moves to a separate account that must be free of any lien or escrow. Lenders plan repayment around this — see our guide to the MahaRERA 70% account.

What lenders check in a redevelopment proposal

On top of the usual checks on promoter, cost and sales (see how lenders assess construction finance), lenders look closely at:

• Society approvals — minutes of the special general meetings, the 51% approvals and the record of developer selection.
• Registered agreements — the registered development agreement, and how many members have signed and registered PAAAs.
• Dissenting members — anyone who has not signed, and whether any disputes are pending.
• Land and title — the society's title, including whether conveyance (actual or deemed) is complete.
• Approvals — LoI, IOD and CC in Mumbai, or building permission and CC under UDCPR, plus the CC for the sale component.
• Member obligations — total rent, deposits and corpus, and how they will be funded or secured.
• Bank guarantee — what you owe the society, which uses up your non-fund limits.
• Feasibility — FSI and TDR assumptions, rehab cost, sale area and pricing, checked against the lender's own valuation.

A clean project report that covers both the rehab and sale components makes these questions quicker to answer.

RBI rules: why banks rarely fund the early stage

RBI's 2025 Directions say a bank shall not extend fund-based or non-fund-based facilities to private builders for acquisition of land, even as part of a housing project. Banks lend to builders through loans linked to a specific project, and must ensure none of the money goes into land speculation. Loans can be sanctioned earlier, but disbursement waits until clearances are in place.

In redevelopment, there is no land purchase in the usual sense, but much of the early spending secures development rights and FSI. Whether a bank will fund items such as TDR, premiums or members' rent depends on its own policy and legal view. Developers should not assume it will.

A typical lender mix

Phase	Common sources
Pre-approval and member payments	Promoter equity; structured funding from NBFCs, alternative investment funds or private credit
Construction	Construction finance from banks, HFCs or NBFCs once approvals and RERA registration are in place
Late stage	Refinancing of costlier early debt; inventory funding against unsold stock

Capital is available for credible projects. Industry observers note that it goes to projects with clear title, realistic assumptions, experienced developers and good governance. For how lender types differ, read bank vs NBFC project funding.

Risks, and what Maharashtra is doing about stalled projects

• Member disputes. A few dissenting members can hold up vacation. Housing Policy 2025 notes that some laws have eviction provisions for such cases but others do not, and proposes adding them.
• Rent defaults. The policy names developers who lack the financial capacity to finish, and stop paying rent, as a major cause of stalled projects.
• Trading of rights. The policy flags developers who sell their rights to others. The 2026 order now makes development rights non-transferable.
• Proposed safeguards. The policy proposes checking developers' financial capacity, depositing three years' advance rent in escrow, a state redevelopment fund, blacklisting, and an apex grievance committee for Mumbai's redevelopment schemes. Treat these as proposals until notified.

Note that "79A" in the MHADA Act is a different provision. It lets MHADA take over redevelopment of dilapidated cessed buildings in Mumbai when owners do not act.

How Biz Corp Solutions helps

We arrange construction finance of ₹5 crore to ₹500 crore for builders and developers, including redevelopment projects. We help you build a funding plan for the expensive early stage and the construction stage, put together a lender-ready file, and approach the banks, NBFCs and financial institutions whose policies fit the project — keeping you updated at every stage.

This guide reflects the Co-operation Department's order of 30 September 2026, DCPR 2034, UDCPR, MahaRERA orders and RBI's 2025 Directions as of October 2026. Rules change often. Confirm current requirements with your legal adviser, planning authority and lender.