CREDAI to Noida Authority: Waive penal interest, rationalize outstanding dues

New Delhi, December 7, 2022:  CREDAI has appealed to the CEO of the Noida Authority to withdraw the order raising interest payment on dues to 18-23%. It also urged them to make developers a part of the collective effort to finalise a road map for the revival of the region’s Real Estate Sector. A press release issued by the company says that the meeting between real estate developers and the CEO, Noida Authority was held on December 07, 2022.

 “With the local real estate sector going through an extremely tough phase, the present demands raised by the Noida and Greater Noida Authorities will have a devastating effect on the Real Estate Developers/Promoters of the region. We at CREDAI can foresee multiple economic downturn effects due to the immediate implementation of this order,” said Manoj Gaur, President, CREDAI NCR.

The release further adds that the CREDAI felt that the registry of almost 80,000 homes will get stuck. It will impact almost 4.5 lakh people. Non-registration of tripartite sub-lease deeds in favour of allottees would severely affect the further investments in the NOIDA and GNIDA region leading to a massive loss of revenue to the Noida and Greater Noida Authorities/State Government/Central Government.

In its memorandum, CREDAI has urged the Authorities to conduct a joint meeting with builders/developers of the region and reconsider the order for the realization of the dues. It also submitted that the authorities should formulate an amnesty scheme or one-time settlement scheme akin to “Samadhan se Vikas” initiated by the Haryana govt. It also appealed for the waiver of penal interest and calculation of the dues at a simple interest rate at par with SBI MCLR.

“The rates of interest and penalty charged by the Authorities on the allotted plots of land are extremely high and have increased from 11 to 14-15 to 18% – 23% per annum. The scenario is not in sync with the prevailing financial market scenario which has witnessed a gradual and consistent fall in the interest rates since 2010,” says Manoj Gaur, President, CREDAI NCR. “We request the authorities to take steps to rationalize it as per the current situation.”

 Further, it also pointed out that a part of the delay has been on account of a situation beyond their control. Authorities have also contributed to this delay. For example, non-issuance of required approvals and permissions from the Authorities for the development of the projects, non-clearance of permission to mortgages to the Banks/financial institutions interested to fund these projects including projects under sports city, and non-issuance of various required approvals of projects under Sports City. Besides, the plots lacked access as roads were not made, or the area under the road was in dispute with the farmers or the plots allotted to builders/developers were either not acquired or there were disputes by the farmers on the project land. Farmer agitation and subsequent legal issues related to Zero Period before the Hon’ble High Court and Hon’ble Supreme Court along with stoppages of work/ban on construction due to orders passed by the Hon’ble Supreme Court, NGT/Pollution Department and Okhla Bird Sanctuary issues, and stoppage of work during Covid among others also help up the work.

 If the penalty is rationalized, CREDAI is of the view, then real estate projects in the region will become net-worth positive with adequate cash flow for the execution of the projects. It will also reduce the land dues and developers would be able to clear dues once the instalments and interest are reworked out at the SBI MCLR interest rate. Further, the State govt. will be to earn to the tune of Rs 2000-2500 crore appx revenue on stamp duty. It will also generate employment. And what is even more important is that the Noida Authority would earn Rs. 6000 crore – Rs 7000 crore via principal amount plus the rationalize interest amount.