The Supreme Court on August 2 asked banks to relax the funding criteria for stalled Amrapali projects that include submission of collateral security and corporate guarantees, saying that lending to the projects be treated as a special case since it was being monitored under the supervision of the apex court.
The two-member bench comprising Justices U U Lalit and Ajay Rastogi asked banks to hold a joint meeting with the court receiver by August 8 to arrive at a consensus on funding, lawyers present at the hearing told Moneycontrol.
“Funding of these projects is the fundamental problem the court and the receiver are trying to resolve. With funds coming from SWAMIH fund and Supreme Court stepping in to ensure that funding from banks is made available to these projects, the uncertainty hovering over these projects can be tackled to a large extent. We are hopeful that the scheduled meeting between the banks and the receiver would yield some solutions for these projects and the buyers therein,” Kumar Mihir, advocate, representing Amrapali homebuyers told Moneycontrol.
The order is awaited.
Earlier, the Supreme Court-appointed court receiver R Venkataramani, tasked with monitoring the construction of Amrapali projects, had said in a note submitted before the apex court that banks and prospective lenders had raised an issue with regard to ASPIRE that was registered but does not have a credit rating as a company or past history of performance.
In view of the SWAMIH funding being cleared in favour of ASPIRE, the above should not be an issue, he had said.
He had asked the apex court to issue a set of directions that banks and financial agencies who are in deliberations with him, shall not insist on any collateral security in addition to the assets of Amrapali which can be duly offered as sufficient security, proportionate to the quantum of funds that may be released/sanctioned.
He had also said that the computation of the commercial viability of the projects be treated as sufficient towards asset valuation and realisables from assets including unsold inventories.
Earlier, NBCC had also apprised the court receiver of the constraints faced by it for raising funds towards completion of stalled projects of the embattled firm. These included issues such as ASPIRE SPV not having any past history and credit rating as it is a newly formed entity.
It had also told the court receiver during a meeting held on July 29 that majority of banks had raised the issue of non-availability of collateral security in the form of mortgage of other assets/ sovereign and corporate guarantee or a letter of comfort.
Banks have been asking NBCC for a letter of comfort for financing the project.
The court had in 2019 asked the government’s construction arm to finish and deliver 38,159 flats by 2023 after several homebuyers sought its intervention, complaining about years of delay in handing over their homes.
The SC on October 13,2020 had permitted the court receiver to incorporate a special purpose vehicle (SPV) to enable flow of funds from SBICap for completion of unfinished projects.
It is for this reason that the company Amrapali Stalled Projects Investments Reconstruction Establishment (ASPIRE) has been floated. It consists of a court receiver, a forensic auditor and a chartered accountant. It is a not-for-profit company under Section 8 of Companies Act, 2013.
ASPIRE announced the sale of the units through an open draw in March 2021. As many as 20 of the 49 residential units spread across Amrapali projects in Noida and Greater Noida worth Rs 20 crore have been sold so far. commercial units was subdued, they said.
The units had been put up for sale in the month of March and the results of the offline draw were announced on June 14, sources said.
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The total cost of completing all stuck projects by Amrapali Group is approximately Rs 8,500 crore. NBCC is executing these projects as PMC and would get 8 percent as fees. It is not using its funds, which are being facilitated by a receiver appointed by the Supreme Court.
SBI Cap is also funding Rs 650 crore for six projects to bridge the temporary liquidity gap.
On July 23, 2019, the top court cancelled the registration of the Amrapali Group under the Real Estate (Regulation and Development) Act, 2016, and ousted it from its prime properties in NCR by nixing land leases for breaching buyers’ trust.