The Supreme Court has recently directed the banks to not treat the accounts of homebuyers of Amrapali Group of Companies, who have bought their flats under subvention scheme, as non-performing assets accounts. The apex court also said that no penalties will be charged from them for defaulting easy monthly installments or EMI payment. This will bring much-needed relief to thousands of homebuyers of Amrapali Group. Additionally, the CIBIL scores of the homebuyers will also be maintained as zero level even if they miss the repayment of the loans, the top court added.
A bench of justices UU Lalit and Bela M Tripathi passed the order. The banks shall be allowed to take the principal amount and interest, the top court clarified. The liability of home buyers will arise when the flats will be handed over to them. They shall discharge their liability at that time other banks can take appropriate action, the bench said.
What is a Subvention Scheme?
A subvention scheme is a legal agreement between the home buyer and developer and the banks offering the home loans. Under the scheme, the home buyers do not need to pay any amount during the no EMI period till the completion and possession given to the home buyer. Around 10,000 home buyers opted for the subvention scheme. According to the agreement, the builder will be liable to pay interest or penalty to the home buyer for failure to make timely payments of installments.
Amrapali Group and its Stalled Projects
In July 2019, the court canceled the registration of Amrapali Group under the Real Estate (Regulation and Development) Act, 2016. As Amrapali could not complete the construction within the stipulated time limit and pay the EMIs, the banks took several initiatives to recover the money from the home buyers.
“Considering the facts and circumstances on record, in our view, the interest of the flat buyers would be subserved if the accounts of defaulter flat buyers who have availed the subvention facilities shall not be treated as ‘NPA account’, nor shall their CIBIL score are maintained as zero level,” the SC bench said.
The top court further added that as and when individual buyers will approach their respective lender banks, their accounts will be regularised and any balance payment will be disbursed by the banks towards a court-monitored account.
Ray of Hope for Amrapali Homebuyers
On March 28, the Supreme Court had asked a consortium led by Bank of Baroda to effectuate disbursal of Rs 1,500 crore for the construction of stalled real estate projects of Amrapali Group. It had noted that six banks — Bank of Baroda, State Bank of India, Bank of India, Punjab National Bank, Punjab and Sindh Bank, and UCO Bank — have granted in-principle approval for the disbursal of funds, while Indian Bank was about to give the final approval.
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