New Delhi - Union minister Arun Jaitley has recently said the new ordinance amending the Insolvency and Bankruptcy Code (IBC) to treat homebuyers as financial creditors will eliminate “fly by night” operators and force the real estate industry to eventually formalise itself.
“Sound and structured real estate developers would remain. The ‘fly by night’ operators would be eliminated. Projects would be completed in reasonable time and investors would get their share of allotments expeditiously,” Jaitley wrote in a Facebook post.
According to the Jaitley, there had been a phenomenal growth in urbanisation post 1991 economic liberalisation, leading to construction of more townships, a trend that is likely to accelerate.
“This is also an area where many ‘fly by night’ operators have entered. Some developers have very little resources of their own. They use the home buyer’s money to develop, invest in land banks and then get caught in the debt trap,” he said.
On June 6, President Ram Nath Kovind gave assent to the ordinance amending the IBC to recognise the status of homebuyers as financial creditors.
Jaitley said construction was already growing at a double-digit rate and that the new ordinance -- along with Real Estate (Regulation and Development) Act -- would catalyse this process further.