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In a determined effort to recoup outstanding dues from developers of delayed estate projects, the Noida Authority has announced its intention to issue notices to those who have yet to open escrow accounts. Officials familiar with the matter revealed that this bold move is expected to result in the recovery of more than Rs 7,000 crore in unpaid fees from builders.
The Noida Authority, responsible for the development and maintenance of the Delhi satellite city, had previously issued directives in June 2023 mandating the establishment of escrow accounts, to be jointly managed by developers and the authority, for projects experiencing delays. However, only a limited number of developers have adhered to these directives thus far. According to the authority, nearly 60 builders are currently facing delays in their projects.
In response to the concerning lack of compliance with this obligatory measure, Noida Authority CEO Lokesh M convened a meeting with real estate developers last month, issuing stern warnings of stringent action if escrow accounts were not opened for each project.
An official statement revealed that the outstanding dues owed by non-litigated builders to the authority exceed a staggering Rs 7,000 crore. The authority aims to recover this substantial sum through the implementation of escrow accounts, primarily as a preventive measure to deter any misappropriation of funds by builders.
By establishing jointly-operated escrow accounts, developers will face significant challenges in diverting funds for use in other projects or purposes. Officials cited numerous instances where funds were redirected to alternate ventures, resulting in project delays in Noida and defaults on land cost payments to the authority.
As per the stipulations, developers are required to allocate 50 percent of the funds collected for a project into these escrow accounts. The specific amount to be deposited into the escrow account will be determined on a case-by-case basis, taking into consideration outstanding dues associated with a project and the funds received from buyers.
In conclusion, the Noida Authority's proactive stance in recovering outstanding dues from developers reflects a commitment to ensuring accountability and timely completion of estate projects. With the issuance of notices for the establishment of escrow accounts, the authority seeks to recover a substantial amount of over Rs 7,000 crore in unpaid fees. This preventive measure not only serves as a deterrent against fund misappropriation by builders but also reinforces transparency and financial discipline within the real estate sector.
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