Loan recovery sword hangs over evicted Maradu flat owners
KOCHI: The hardships of the evicted residents of the now-demolished highrises at Maradu are far from over, it seems. As if the sight of the buildings they once called home turning to dust was not traumatising enough, the residents are now seeing bankers knocking at their doors to recover the loans they availed to buy flats in the ill-fated highrises.
While many continue to repay the loans via EMIs (Equated monthly instalments), a few others have decided against it. The residents are mulling over legal steps for a relaxation in interest rates or in the principal amount to be paid.
Around 100 persons who lived in the now-demolished apartment complexes had availed home loans ranging from Rs 40 lakh to Rs 80 lakh each from various banks and NBFCs (non-banking financial institutions) and are now planning to approach the court to settle the loans.
“The due date for my EMI of Rs 82,000 for the home loan of around Rs 70 lakh from HDFC Bank is on seventh of every month. I paid the EMI for this month on January 7, before Holy Faith H2O, in which I lived, was demolished on January 11,” said Beyoj Chennatt, who had been at the forefront of the protest of the flat residents before the demolition.
He said the bank was aware of the issues, as he had availed the interim compensation of Rs 25 lakh after producing the documents issued by the bank.
“However, it has chosen to turn a blind eye,” he alleged. “Should I default on the EMI, my CIBIL score would be affected and I would not be able to take a bank loan,” he said.
Beyoj said some residents had received notices from banks for defaulting on the repayment of loans. “We are planning to take legal steps seeking relaxation on interest rates or on the principal amount borrowed from the banks,” he said.
The residents said they should not be made responsible for repaying the loans they took to buy flats which were demolished for violations they did not commit.
“Till the end, we had hope the highrises won’t be demolished. We have lost everything now. With confusion all around, I decided to discontinue the payment of EMI until the bank took a final decision on loan repayment,” said Shibu George, a resident of demolished Jains Coral Cove. His EMI for the loan taken from DHFL is around Rs 40,000.
“The banks have not held any discussions with us so far. After a discussion with them, I will explore other options, including approaching the court,” said Shibu.
What experts say
Financial expert C N Venugopal, former director of State Bank of Travancore, said a concession or extended time period could be granted to the borrowers as per RBI norms. “However, this requires a high-level decision. Recovery of loans is a tough task for banks. While they can freeze the compensation amount allotted by the government to the flat owners, it is unsustainable under law,” he said.
Legal experts said while banks have loan recovery options like attaching the borrowers’ land, recalling the loans and continuing the loan accounts accepting the EMIs as per the agreement, they should give borrowers waiver towards repayment of loans the latter took to purchase the flats.
“This is a situation in which buyers lost their homes. Hence, it is a force majeure event cancelling all corresponding repayment obligations,” said Pradeep Joy, a lawyer practising corporate law in Kochi.“Further, if the demolished projects were verified or sponsored by lenders, they are responsible for contributory negligence,” he said.