Realtors in Noida hit by shortage of funds

The controversy over land acquisition in the national capital region (NCR) has dealt another blow to developers in the region with banks stopping funds to the realtors citing uncertainty of the projects. Worse still, even private equity (PE) firms and nonbanking financial institutions are in no mood to lend to the beleaguered developers because of the uncertainty surrounding their projects.

This comes on top of construction work being stopped at many sites and customers refusing to pay installment due, thus choking the money flow for the projects. "The situation is not very encouraging for developers and is taking a toll on our finances. The banks are refusing to lend us till the status is clear," the chief financial officer (CFO) of a leading NCR developer told MAIL TODAY on condition of anonymity.

"The Noida land row is already hurting our finances. The construction work has stopped and the people who have already booked flats are refusing to pay further installments till the position is clear," he added.

Read how land acquisition woes spoil Noida party

"This is a really difficult situation for developers. We bought land from the authority, so we were not responsible for paying compensation. Now when the project is going on we are suffering because of the fight between the authority and the farmers," said Pankaj Bajaj, managing director (MD), Eldeco Infrastructure and Properties.

"The inflow of money is blocked. Customers are not paying further installments and banks are refusing to give loans Banks stop funding realty projects over land buy row Realtors in Noida hit by shortage of funds because of the situation. So, the finances are certainly hurt," added Bajaj, who is also the president of Credai, NCR.

"We cannot comment and we cannot even give a timeline when it is going to be resolved. All we can ensure is that the money of the customers are safe with us and in case if there is any problem we will refund their money," Bajaj added.

At most of the project sites, construction work has started. Some are even nearing completion. However, Bajaj said that the controversy may delay the completion of the projects. Greater Noida alone accounts for more than 70 per cent of the total home sales in the NCR.

Developers assert that only a small portion of the projects fall under the disputed area. But despite this the overall customer sentiment has turned negative. "The fact that banks are refusing loans for the area is adding to the negative sentiment. One PSU bank and one private bank have already refused to sanction home loans for the projects as the matter is in court," said a realty broker in Noida.

Last month, Allahabad High Court annulled the acquisition of about 400 hectares of land by the Greater Noida Industrial Development Authority (GNIDA) in Sahberi village, Surajpur village and Gulistaanpur village in Greater Noida, terming the acquisition of land from the farmers as illegal.

The developers and GNIDA then approached the SC against the High Court order. The apex court, after lashing out at the state government's land acquisition policy, posted the matter for detailed hearing on July 5.

Courtesy: Mail Today