Finance Minister Nirmala Sitharaman may announce setting up of a stress fund for completing pending real estate projects in the Budget 2019, to be presented on July 5, 2019. Home buyers’ body FPCE, earlier known as ‘Fight for RERA’ which had taken the lead to push for the real estate regulation law, has urged the government to set up a Rs 10,000 crore stress fund for completing pending real estate projects in the next five years, the Times of India said in a report.
Real estate companies have duped thousands of homebuyers, who have put their lifetime savings for buying a flat. The recent liquidity crisis in the NBFC sector has made the situation even worse for realtors and has squeezed credit supply to the sector.
The buyers’ body in a letter addressed to Finance Minister Nirmala Sitharaman said the government should notify homebuyers as “primary secured creditors” instead of the current status of “unsecured creditors”, which puts them at a disadvantage when the insolvency proceedings start.
”We suggest the government should immediately, either through the Finance Bill or otherwise, move an amendment to the Insolvency and Bankruptcy Code, providing for homebuyers to be made ‘primary secured creditors’,” FPCE wrote in the letter to the FM.
Worth mentioning here is that primary secured creditors have the first right on the assets of a real estate company once it is referred to the bankruptcy court. Typically banks or financial institutions who provide secured loan to realtors have the first right over the assets of a real estate company after it is referred for bankruptcy proceedings.
The consumers’ organisation also urged the government to constitute a task force under the housing ministry to identify projects nearing completion that can be taken up first using the stress fund. It also suggested that a public sector company be assigned the task to complete them, the ToI report said.
SOURCE- Et news
