After 2 months the Apex Court ordered the Noida & Greater Noida authority to charge a lower interest rate on residential project developers for the land they bought, the Govt of Uttar Pradesh is still to implement it. Now, UP real estate regulatory authority (UP-Rera) has recommended to the state to follow the order as it would help revive the real estate sector, officials said.

According to a State Govt official, the Govt is reviewing the order & considering all legal options before it.

UP-Rera wrote its recommendation to the state additional chief secretary of the industrial development department & said the sector was witnessing a liquidation crisis in the wake of the COVID-19 pandemic.

“In view of the possibilities that disputes, which are increasing between buyers & promoters in Noida & Greater Noida, may be positively resolved, we decided to send our recommendations to the government on this issue as per the provisions of Section 32 of the Rera Act 2016,” said Balwinder Kumar, UP-Rera member who confirmed that the letter was sent last week. “The real estate sector has been witnessing a huge financial crisis lately. As a result, homebuyers’ interests are also affected as promoters are unable to deliver units due to the fund crunch.”

According to their policies, Noida & Greater Noida authorities charge an interest rate of 11 per cent on developers, who pay for the housing land in instalments. On defaulting, a penal interest is imposed.

Going by the old interest rates, Noida has around ₹25,000 crore in land dues that it has to recover while GNIDA has to recover around ₹7,000 crore from developers.

On July 10, the Top Court, while hearing petitions in the matter, directed Noida & GNIDA to only charge an interest rate of 8.5 per cent, as per the marginal cost of funds-based lending rate (MCLR) on land cost, fixed by the State Bank of India. The Supreme Court’s order also says that developers should deposit 25 per cent of total dues within 3 months & the rest within 1 year from the date of the order if they want to avail benefits of the Supreme Court’s order.

“Many developers have submitted their proposals with Noida & GNIDA asking that their land dues be recalibrated in light of the Supreme Court order. However, the 2 authorities are yet to settle the dues. If this order is implemented, then at last 250,000 units can be finished & delivered,” said RK Arora, president (UP chapter), National Real Estate Development Council (NAREDCO).

“The commencement certificate required to start work at a new project is issued only after the no financial dues certificate. & the no financial dues certificate is possible only when the financial dues are settled, with the new Supreme Court order on interest rates. We hope that the Noida & Greater Noida authorities implement this new order & help the sector,” said Prashant Tiwari, president (Western UP chapter),Confederation of Real Estate Developers Association of India (CREDAI).

Noida authority chief executive officer (CEO) Ritu Maheshwari & the Greater Noida authority CEO Narendra Bhooshan refused to comment on the issue. However, a UP Govt official, on condition of anonymity, said, “The state government is examining the legal aspects of this case before implementing the same.” 

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