The muddle over real estate projects in Greater Nodia has left many banks worried over the fate of loans, running into hundreds of crores of rupees, committed to home buyers and developers of realty projects.
"This is an extraordinary situation wherein the government-approved projects have been cancelled. We are examining the court orders," a senior banker said.
Many real estate projects have run into deep trouble as the Allahabad High Court yesterday quashed acquisition of another 600 hectares of land in two villages in Greater Noida, affecting at least 11 projects and 20,000 buyers.
The apex body of real estate players, CREDAI, had said they would challenge the court order.
The twin development left home buyers, who had booked flats in the upcoming projects in Greater Noida, in lurch.
Bankers said they are as uncertain as customers. They are still ascertaining the quantum of loans disbursed to borrowers from various branches.
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Sources said banks may not have any choice but to invoke bank guarantees in case the loans are not re-paid.
A major issue before banks is that most of the developers are assuring customers about return of money but no developer is talking about funds sourced from banks, a worried banker said.
In the aftermath of these developments, banks are adopting a cautious approach as far as sanctioning loans for projects in Greater Noida are concerned.
Another banker, however, said although lenders have committed a large number of loans, actual disbursement would be minuscule.
In many cases, only the first installment has been disbursed, said LIC Housing Finance Chief Executive Officer VK Sharma.
"A major area which was under development is at a standstill. Customers are confused and hence we are finding difficulty," he added.
Customer confidence is shaken, he said, adding, informal tripartite discussion are on among developers, customers and financial institution to resolve the situation.
Some of the farmers of Shahberi village of Greater Noida has already said that they would like to have higher compensation for their lands instead of taking back their land.
It is to be noted that three more cases are pending before the Allahabad High Court pertaining to land acquisition in Greater Noida.