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NEW DELHI: Banks cannot be converted into developers and builders or an authority to ensure that a real estate project is completed Delhi High Court Where is it? The High Court said that the circular issued by reserve Bank of India (RBI) advises banks to appoint auditors to check whether loans have been misused and banks can only red flag the borrower about misuse.
The court said that it is for the lenders to take appropriate legal action by approaching the civil forum to ensure that the project is completed within time.
A bench of Chief Justice Satish Chandra Sharma and Justice Subramaniam Prasad said, “…it cannot be said that it is the responsibility of the banks to complete the project and the bank cannot act as a builder to complete the project.” a decision.
The judgment came on a petition initiated by the court on the basis of a letter seeking directions to the central government to draft and implement a comprehensive scheme to address the grievances. home buyers are availing home loans, including those who do not have possession of their flat but are still paying monthly EMI installments and are unable to claim tax benefits on such monthly interest payment.
The complainant prayed for formulation and implementation of a scheme that would conclusively address the grievances of other home buyers who do not have the capacity to approach courts or forums for redressal against builders.
The complainant alleged that the bank, the government and the builder act as part of a nexus and work against the public interest without any accountability to the public for their hard earned money. The complainant wanted the banks to be held responsible for the inordinate delay in real estate projects as banks sanction loans only for projects which are verified as genuine after due verification.
High Court said banks are always open to approach when project proponent defaults in completing a project National Company Law Tribunal Below Insolvency and Bankruptcy Code2016 to appoint an insolvency resolution professional and to take measures to ensure that the project is revived and completed as banks are also eager to recover their money.
“The entire issue raised by the complainant has to be looked into to protect the interest of the home buyers and the banks dealing with public money, and the banks cannot be converted into developers and builders or the authority on whom the onus is to ensure is loaded to indicate that the project is complete.
“Apart from the measures in the Insolvency and Bankruptcy Code, 2016, it is always open for home buyers to approach Real Estate. regulator Right (Rare) to ensure that the project is completed,” the bench said.
It said that a proper mechanism is available for redressal of grievances of a home buyer and also perused the Master Circular (On Loans and Advances and Housing Finance) of 2015 issued by RBI and said that no further orders and directions need to be passed Not there. Petition.
“A perusal of the said master circular reveals that RBI has advised various banks as to which projects loans should be given and the precautions banks should take while giving loans. The master circular also advises that the quantum of loan which is to be provided by banks for housing finance and to maintain credit to value ratio in case of individual housing loans,” it said.
The court noted that RBI can only guide banks to frame their loan policies with the approval of their boards and banks are expected to do basic due diligence at the time of approval/sanction/disbursement/renewal of loans .
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