A fact-finding exercise launched by Uttar Pradesh Chief Minister Yogi Adityanath in April to “find out the reasons why estate agents are leaving Noida and Greater Noida” and going bankrupt has yet to yield results, officials said.
Officials say the state’s property sector is facing a financial crisis, with 60 property companies in Noida and Greater Noida itself undergoing corporate insolvency resolution (CIRP) processes in addition to several other real estate agents going bankrupt. This worried the state government, which failed to collect dues amounting to ₹35,000 crore from developers, officials said. Concerns about many distressed homebuyers are also growing, they added.
Officials say the government is also concerned that dragging property companies to the National Company Law Tribunal (NCLT) will help defaulters evade prosecution.
“In April, we asked the Chief Executive of the Greater Noida Authority to find out the exact reasons behind the crisis facing estate agents, home buyers and other stakeholders. Many real estate agents are undergoing CIRP, and the government wants to understand the problem that led to this crisis. I can only understand the problem better after reading the investigation report,” said Arvind Kumar, Additional Chief Secretary, Commissioner for Infrastructure and Industrial Development, Uttar Pradesh.
All industrial bodies including Noida Industrial Development Authority, Greater Noida and Yamuna Expressway fall under Kumar.
According to the Greater Noida Authority, there are 34 real estate projects in Greater Noida and at least 26 projects in Noida are undergoing CIRP at NCLT. The court takes over the control of a delayed or stalled real estate project through a resolution professional if a real estate agent cannot manage the business or repay the money he has borrowed from lenders or to investors.
Asked about the status of the investigation report, Narendra Bhooshan, who was the CEO of the Greater Noida Authority for the past three years till May 4, declined to comment as he is now the Principal Secretary of the Department public works. , Uttar Pradesh.
Surendra Singh, who was appointed CEO of the Greater Noida Authority on May 5, said he would investigate the matter.
On Friday, Amandeep Dhuli, Additional Chief Executive, Greater Noida Authority, met with the Legal Department and reviewed the cases involving the 34 ongoing CIRP projects at NCLT in the main administration building of Sector Knowledge Park 4. However, no official wanted to comment on the outcome of the meeting.
Meanwhile, residents have alleged that the state government is all bluster and failing to act on the concerns of homebuyers who have poured their hard-earned money into housing projects.
Anshuman Jain, a homebuyer who was waiting for his apartment in one of Wave Group’s housing companies, said: “Government just takes meetings without any solutions. This has been happening for many years. »
“We have invested ₹65 lakh to buy a house almost 13 years ago. Our Realtor has undergone CIRP at NCLT for the past five years. It seems that there is no solution to our plight. The UP government doesn’t seem to care about us at all,” said Ashish Mohan Gupta, a buyer for Jaypee Infratech Limited.
According to the Confederation of Real Estate Developers of India (CREDAI), the real estate sector in Noida and Greater Noida has been severely demotivated by uncertainties over several issues including the imposition of high interest on land rights.
On July 10, 2020, the Supreme Court, while hearing a petition regarding the Amrapali Group, requested the Noida authority to charge only an interest rate of 8.5%, based on the marginal cost of funds based lending rate (MCLR) set by the Reserve Bank of India, on land rights of developers. The order came in response to a petition by a Noida-based developer, ACE Group, which called for the “unreasonable” interest rate on group housing land to be reviewed. However, this order has still not been executed.
Admittedly, the initial interest rate is 7.5%, which should gradually increase in the event of default. In most cases, the developers owe the Noida authority up to 20% interest. According to the authority’s policy, the initial deposit for land is 10% of the total cost, and the rest can be paid to the authority in installments on which it charges interest.
“We raised this issue in April with senior UP government officials. If the Supreme Court order had been implemented in time, many real estate agents would not have faced a financial crisis. We hope that the investigation report will be submitted soon and the issues will be resolved at the earliest,” said Prashant Kumar Tiwari, Chairman of CREDAI.