News: Noida, Greater Noida authorities to move SC over 8% interest order-16-09-2020

https://realty.economictimes.indiatimes.com/news/regulatory/noida-greater-noida-authorities-to-move-sc-over-8-interest-order/78139688

GREATER NOIDA: Staring at losses of nearly Rs 10,000 crore this fiscal, the Noida and Greater Noida authorities have decided to move the Supreme Court for a review of its decision to bring down the interest rate for land that builders pay to 8% per annum in line with SBI’s marginal cost of funds based lending rate (MCLR).

The authorities, at present, charge 12% interest per annum from private developers over the land allotment cost. In case of default, the interest rate is increased to 15% and compounded every six months. And with the total dues of builders in the two cities currently being over Rs 26,000 crore, the SC’s order could result in a dent of up to 40% to the authorities’ coffers, officials said.

A Noida Authority official said, “We have estimated the restructured payment plan with 8% interest rate. We would suffer losses to the tune of 30% to 40%.”

However, real estate experts and developers say that apart from incomplete projects, scores of ready buildings in the twin cities stand to benefit from the SC’s decision. Over dues, the authorities have held back the process of issuing completion certificates to these projects. The case is expected to be taken up on September 21.

“About 1.50 lakh units currently remain stuck in the pending real estate projects in Noida and Greater Noida. The SC’s decision is aimed at resolving the mess between private developers and the authorities. Because of extremely steep interest rates, the pending amount kept growing over the years,” said Pankaj Kapoor, the managing director of Liases Foras, a real estate data analytics company.

Noida Authority has given out 116 plots to private builders, out of which only 43 projects have been completed. Similarly, in Greater Noida, of 114 real estate projects, 67 projects remain stuck.

Due to mounting dues, a lot of these projects became financially unviable and developers left them midway after taking money from homebuyers.