NewKerala.com

India's Real Estate Insolvency Needs Project-First Shift: ICRA Report

A new report from ICRA advocates for a fundamental shift in India's real estate insolvency framework from an entity-level to a project-centric model. It emphasizes that completing and delivering homes to buyers should be prioritized over mere financial recovery for developers. The report identifies 55 key issues and makes 155 recommendations to harmonize the Insolvency and Bankruptcy Code with real estate regulations. This change is critical as ongoing and resolved insolvency cases impact approximately 250,000 homebuyers, creating housing insecurity for nearly a million individuals.

Key Points: Real Estate Insolvency Needs Project-Centric Model: Report

  • Shift from entity to project focus
  • Strengthen IBC-RERA coordination
  • 155 recommendations made
  • Affects 250,000 homebuyers
  • Aims for timely completion
2 min read

Real estate insolvency framework needs project‑centric shift: Report

ICRA report calls for shift to project-centric insolvency to complete homes, affecting 250,000 buyers. 155 recommendations made.

"project completion and delivery of homes is a more desirable outcome than financial recovery - Manushree Saggar, ICRA"

New Delhi, April 10

Strengthening India's real estate insolvency framework needs a fundamental shift from entity‑level resolutions to a project‑centric model that prioritises completion and delivery of homes, a report said on Friday.

The report from ICRA called for strengthening coordination between the Insolvency and Bankruptcy Code, 2016 and the Real Estate (Regulation and Development) Act, 2016 to achieve this transition.

The Committee on Framing Guidelines for Insolvency Proceedings in the Real Estate Sector submitted its report to the Insolvency and Bankruptcy Board of India earlier this week.

The report highlighted the need for a shift from an entity-centric, recovery-focused framework to a project-centric, completion-driven approach with stronger coordination between both laws, said Manushree Saggar, Senior Vice President and Group Head, Structured Finance, ICRA Ltd.

"While the RE sector has the second-highest share in cases referred under the IBC, RE insolvency also presents unique challenges, as it has a higher social cost and directly affects large numbers of homebuyers," she added.

Hence, project completion and delivery of homes is a more desirable outcome than financial recovery, Saggar noted.

The report highlighted 55 key issues affecting RE insolvency and has made 155 recommendations, covering structural, procedural and institutional aspects of the framework.

These recommendations are aimed at improving efficiency, ensuring timely completion of projects, enhancing stakeholder confidence, and strengthening alignment between insolvency processes and sectoral regulation.

They seek to harmonise insolvency law with real estate regulation, judicial guidance, and constitutional values, ensuring that the Code functions as an instrument of resolution rather than prolonged uncertainty.

"In ICRA's opinion, better alignment between insolvency processes and real estate sector-specific regulations could improve efficiency and enable timely completion of projects, which in turn would enhance stakeholder confidence," she said.

Ongoing and resolved insolvency cases together affect nearly a quarter of a million homebuyers, translating into housing insecurity for close to a million individuals when household size is considered.

- IANS

Share this article:

Reader Comments

P
Priya S
Finally! The social cost mentioned is so real. It's not just an investment; it's people's life savings and dreams of a home. Aligning IBC with RERA makes perfect sense. Hope the recommendations are implemented quickly. Homebuyers have suffered for too long.
R
Rohit P
While the intent is good, I'm skeptical. We have great laws on paper (RERA, IBC) but the execution is poor. Courts are overburdened, and builders find loopholes. A project-centric model will need very strong monitoring and fast-track tribunals to actually work. Otherwise, it's just another report.
M
Michael C
Interesting read. The scale is staggering - a quarter million homebuyers affected. This shift in focus from financial recovery to project completion seems like a more humane and practical approach for a developing economy. Timely completion is key to restoring confidence in the market.
S
Shreya B
The coordination between IBC and RERA is the crucial point. Often, they work in silos, causing more delay. If a resolution professional can work under the guidance of RERA to complete a project, it will be a game-changer for lakhs of waiting families. Jai Hind!
D
David E
155 recommendations is a lot. The government needs to prioritize the key structural changes first. The "prolonged uncertainty" mentioned is the worst part for buyers – paying EMI for a home that doesn't exist. Hope this brings some clarity and speed.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50