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Banks are `NPAs' for landlords

Rajalakshmi Menon

MUMBAI, July 24

THE slum-dwellers of Mumbai are not alone in facing eviction threats. Nationalised banks, which have been sitting pretty in their premises for decades, are now facing threats of eviction from the plush properties they occupy. After years of cushy comfort , it's time for them to pay, thanks to changes in the Maharashtra Rent Control Act.

Some 200-300 bank branches in Mumbai have been slapped with eviction notices by landlords. Cases have been filed by landlords against banks such as Central Bank of India, Union Bank of India, Dena Bank, Bank of India and Bank of Maharashtra in the small causes courts.

The rent Act of 2000 has decreed that companies with a paid-up capital of over Rs 1 crore will not have the protection of the earlier Bombay Rent Act and will have to negotiate contracts to pay market-related rents.

Under the Bombay Rent Act, there was a ``freeze'' on the rent paid, with some tenants paying rents fixed as far back as 1940.

While banks were earlier paying rents of Rs 10-20 per sq ft, they will now be charged as high as Rs 100-120 per sq ft. In South Mumbai, bankers said landlords are upping rates further.

``The cover we had under the previous Act has been abruptly removed and landlords are charging rates inconsistent with market-related rates. They are trying to extract the maximum out of us without even giving us a chance to negotiate,'' said one banker.

Landlords maintain that some nationalised banks have a policy of neither acquiring premises nor negotiating rent.

The Indian Banks' Association (IBA) has asked the Maharashtra Government for a regulatory mechanism to administer rents. "The IBA has asked the State's Housing and Urban Development Ministry to appoint a third party, whereby a `fair rent' can be determin ed to prevent landlords from charging exorbitant rates,'' said a banker. The IBA has also recommended the Tamil Nadu system of regulating rent.

The Ministry has said it would consider the request of bankers but added that the appointment of a Fair Rent Authority in Maharashtra would not be a viable option. Instead, an authority could be established only where the problem is acute.