New Delhi: India's largest bank SBI on Monday said that rights of home buyers cannot be denied and they should be treated at par with the lenders under the insolvency and bankruptcy law.
Addressing a NAREDCO's realty conference, SBI's Managing Director (National Banking Group) Rajnish Kumar said the risk of banks and home buyers have reduced after the implementation of new real estate law RERA from May this year.
He advised home buyers to purchase only completed flats because investing in under-construction projects is no more attractive with hardly any appreciation in property prices in the last few years due to demand slowdown.
Stating that "buyers' right cannot be denied" in any stuck real estate projects, Kumar said home buyers and lenders must be put on "equal footing".
He also said that home buyers and lenders should bear losses at pari-passu if there are any losses in projects.
However, he said that a final decision would be taken by the National Company Law Tribunal (NCLT).
Kumar's remark comes in the wake of the NCLT last month admitting IDBI's plea for initiating insolvency proceedings against Jaypee Infratech for defaulting on Rs 526-crore loan.
The NCLT has appointed Anuj Jain as the interim resolution professional (IRP) to carry out the proceedings under the Insolvency and Bankruptcy Code 2016.
Bank of Baroda has also approached NCLT for initiating insolvency proceedings against Amrapali. These developments have created panic among thousands of buyers of Jaypee group and Amrapali and they are protesting on streets, social media and some of them are even going on hunger strike.
Kumar said lenders and home buyers would have to take "hair cut" if there are any project losses. He further said that one party cannot bear the losses and it has to be pari-passu.
Speaking on the sidelines, Kumar said: "NCLT will take a final decision. The insolvency law is also evolving. As a bank we do project funding as well as provide home loan to buyers. So in this debate, we are with both lenders and home buyers."
"Home buyers' interest should be protected," Kumar said.
Asked whether SBI would defer EMI for home buyers, he said this would lead to an increase in the banks' NPA.
Kumar, however, asserted that the banks have reduced the home loan rate significantly.
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Updated Date: Aug 28, 2017 18:33:30 IST