Several stakeholders in the real estate sector, including developers and industry associations, are urging the Uttar Pradesh government to implement effective policies that will aid industrial development bodies. This initiative is particularly focused on the cities of Noida and Greater Noida, with the objective of promptly resolving insolvency cases threatening various projects.
Currently, numerous decisions on ongoing projects have been stalled as authorities prefer to assume the role of financial lenders rather than operational ones. The aim here is to add effectiveness without collecting commissions on projects that are presently in a state of limbo.
The Confederation of Real Estate Developers Associations of India, known as CREDAI, has reported that around 190,000 properties are stuck in Noida, Greater Noida, and Ghaziabad, which collectively amount to a staggering value of 1 lakh crore. In Greater Noida specifically, 36 property projects are undergoing bankruptcy or insolvency proceedings, a situation that affects approximately 50,000 home buyers and has frozen about Rs 7,000 crore in administrative fees.
Investment Cycle May Resume!
Experts assert that imposing interest rates, fines, and additional fees could destabilize comprehensive settlement plans. They believe that normalizing the investment cycle in these regions hinges on resolving the prevalent insolvency cases.
Developers are currently facing dues of around Rs 40,000 crore to three different NCR authorities, covering Noida, Greater Noida, and Yamuna, with these dues originating as far back as 2010. However, with alterations to the interest rate, this obligation may realistically decrease to Rs 25,000 crore.
According to a recent letter from CREDAI, several notable property developers are entangled in the insolvency process. The list features reputable names such as Jaypee Infratech, Amrapali, BPPL, Granite Gate, and Subhkamna Buildtech. CREDAI has cautioned that if development authorities persist in challenging settlement plans in the courts without establishing a sensible decision-making framework to address the aforementioned issues, delays will ensue, further complicating the settlement process.
Proper Policy Framework Needed
Sahil Vachani, MD and CEO of Max Ventures and Industries Ltd, emphasized, "To accelerate the process of insolvency proceedings in the Greater Noida and Noida area and manage the substantial land dues owed to industrial development authorities, a pragmatic policy framework is necessary. In the absence of such a framework, restructuring insolvent corporate debtors is unlikely to be economically viable."
Adding to this, Abhishek Tripathi, managing partner at Sarthak Advocates and Solicitors, remarked, "Authorities like Noida and Greater Noida must recognize that the dues they receive from developers are treated as operating debt, which positions them as acting creditors. Past commission fees or dues should be reassessed based on a resolution plan sanctioned by the Creditors Committee and the NCLT."