By Accommodation Times Bureau
LIC Housing Finance declares Orbit Corporation the well known real estate developer’s accounts as a non-performing asset (NAP) and served a recovery notice to the company, the company owes a huge amount of debt amounting Rs. 96 crore, on the repayment of loan borrowed from LIC Housing Finance including interest amount. RBI’s decision on tightening the liquidity has caused financial troubles for some developers, as the current scenario of real estate market is deem and the liquidity challenge has added more financial troubles.
The experts and developers had already presumed the effects of tightening the liquidity may enable banks and HFCs to convert of loans of default developers into NPAs. LIC Housing Finance is the first to initiate the step, targeting Orbit Corporation one of the biggest name in the real estate market. More banks and HFCs can come up with such declarations.
Orbit Corporation has constructed huge and luxury projects in the south and central regions of Mumbai, which were counted among the premium developments of the city. According, to the company they had borrowed a loan of Rs. 250 crore from LIC Housing Finance in the year 2008 out of which they had repaid the loan amounting Rs. 154 crore by the year 2010 end. In January 2013, the company failed to repay the final payment of the entire loan amount.
As the company’s debts were huge and the due period was long LIC Housing Finance decided to implement strict actions. The Housing Financers even restricted the developer from creating any third-party rights on over 2.40 lakh sq. ft. of its three huge projects that were mortgaged against the loan amount along with hypothecated receivables from seven luxury projects of the company.