Amrapali case: Supreme Court asks banks to recast loans, release funds

The SC also severely criticized the authorities in Noida and Greater Noida for charging builders high interest rates of up to 23% for late payments.

In relief for thousands of struggling Amrapali group home buyers, the Supreme Court on Wednesday asked banks and financial institutions to restructure and release sanctioned loans to home buyers, to ensure the availability of funds. for the State National Buildings Construction. Corp Ltd (NBCC) for the construction of stalled housing projects. He also asked RBI order banks to release loans that have been declared as non-performing assets in accordance with guidelines from the banking regulator.

In view of the interest of homebuyers, a judiciary led by Judge Arun Mishra called on banks to release loans sanctioned under “current RBI standards for release of loans and rates set by the RBI by therefore. The disbursement of new loans can be based on the current interest rate set by the RBI ”.

The disbursement of the balance loans at the currently lower rates was ordered “in the particular facts of the case (Amrapali). It can be released in stages and long-term loan restructuring can be done so that construction is completed and buyers are able to repay the loan, ”he said.

“… As the projects have been at a standstill for several years, the buyers have obtained loans but cannot benefit from the fruits of their investment. At the same time, if the projects are not completed and the home buyers are not sure about the handing over of the apartments, it would be difficult for them to pay bank dues until eternity and it is in the interest home buyers as well as banks and FIs as they can get money back when projects are completed efficiently, ”the SC said.

The SC also severely criticized the authorities in Noida and Greater Noida for charging builders high interest rates of up to 23% for late payments. He said that despite the encumbered and disputed land allocation and various other issues, the authorities had neither reduced the exorbitant interest rate nor completely waived interest and other charges due to the delay and default. payment of land royalties. “The authorities concerned did not take timely action, and financial institutions resulted in the blocking of projects, and now it has become difficult to complete the projects,” added the Chamber.

In order to give impetus to “stalled” housing projects, Judge Mishra ordered that the authorities in Noida and Greater Noida could not charge builders high interest rates for any late payments. Capping the interest rate at a maximum of 8%, Judge Mishra said the interest issue affects “the general public, especially homebuyers, banks and financial institutions.”

The judges noted that although banks over the past five years have reduced interest paid on term deposits and are now only 6% to 7%, interest rates on the late payments invoiced by the authorities have remained exorbitant, contrary to the economic situation prevailing in the country.

They said there had been absolutely no commercial and commercial activity during the Covid lockdown in the real estate sector and that the entire sector had come to a screeching halt, causing further financial losses and damage to the real estate sector. .

Dismissing requests from the authorities in Noida and Greater Noida to release the FAR (floor area ratio), which was available to the former Amrapali group of companies, the Supreme Court authorized the sale of the remaining FAR through the intermediary of the court-appointed receiver to generate more funds. that can be used to complete projects.

“Sale of unused DSC must go up to the authorized limit @ 2.75 or more depending on availability; the sale of FAR in excess of 2.75 up to 3.5 under the purchasable program or otherwise granted in the Dream Valley project… and other projects or any increase in FAR beyond what is permitted / purchasable for reasons such as the advent of the Metro project must be sold and transferred under the authority of the receiver and committee appointed by this Court, ”the order reads, while posting the case for a new hearing on the 17th. June.

On June 3, the Supreme Court asked NBCC, SBICap Ventures, which manages the government-sponsored stress fund for the real estate industry, and lead lawyer R. Venkatramani, who was appointed receivership, and UCO Bank organize a joint meeting and submit a final plan for the execution and delivery of the blocked housing projects of Amrapali.

The receiver’s note submitted to the SC previously indexed funds from the sale of 5,228 unsold stocks to approximately Rs 2,220.45 crore, funds from the sale of other Amrapali properties, attached or not, to Rs 500 crore, bank loans to homebuyers and the balance accumulating on units sold at around Rs 3,870.4 crore and claims on unsold units at Rs 213.46 crore.

On February 28 last year, the judiciary authorized Delhi police to arrest the Amrapali group CMD Anil Kumar Sharma and two directors – Shiv Priya and Ajay Kumar – for cheating. The SC has been monitoring the execution and handover of Amrapali housing projects at a standstill since an internal audit report revealed serious irregularities on the part of Amrapali’s companies and their directors.

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