Uttar Pradesh RERA Directs Banks to Provide Funds to Delayed Real Estate Projects

Uttar Pradesh RERA Directs Banks to Provide Funds to Delayed Real Estate Projects

The move has been appreciated by homebuyers, hoping to see completion of their apartments

The Uttar Pradesh Real Estate Regulatory Authority (RERA) has directed the banks to provide funds to delayed real estate projects in Noida and Greater Noida.

The move comes after the authority found that many homebuyers’ associations were struggling to arrange finances to complete the projects due to the banks’ reluctance due to uncertainty of recovery of their funds.

Under Section 8 of the Real Estate Regulatory Authority Act, the authority has the option to de-register a project and invite the buyers’ association to take over the construction and delivery of the project in cases where the developer is unable to complete it. However, many buyers’ associations could not do so because of financial constraints.

While Noida comprises 18 delayed housing projects, Greater Noida has 10,000 flats being developed under the rehabilitation clause of the Uttar Pradesh RERA Act. Out of these, 15 are jointly developed by the promoters and the Association of Allottees (AOA) and three are with the AOA for construction and delivery.

As per Sanjay Bhoosareddy, the Chairman of RERA, “We have realized that banks are reluctant to provide funds to these projects because of the uncertainty of recovery of their money. But we need to deliver the flats to the buyers, who have been suffering for long.”

The Chairman said that RERA would call an urgent meeting with the lead bank officers in Uttar Pradesh and request for providing funds for the delayed projects. He added that they would also meet the Noida and Greater Noida authorities to ensure that necessary permissions to the banks are provided.

One of the projects where the buyers’ association was struggling to arrange funds was the Sampada Livia of PSA Impex Group in Greater Noida. In January 2013, the buyers engaged a developer to complete the remaining work in the housing project that was to be delivered in 2012-13. They arranged around Rs.13 crores, but the bank stopped home loans approved earlier. Thus, the realtor could develop only 10 percent of the Rs.220 crore project of 750 units.

Bhoosareddy claimed, “We have come to know that banks are not releasing the payment of the home loans approved earlier, whereas the buyers need completion of the projects. Our priority is that in such cases the banks continue to release the payment. And if the homebuyer needs any legal support from us, we will extend the same.”

The homebuyers have welcomed RERA’s move and have urged it to resolve the hurdles.

Arun Singh, an aggrieved homebuyer, remarked, “If RERA plays a proactive role and supports the buyers by engaging other agencies including the Noida authority and the banks, then many cases related to late delivery can be resolved.”