Home buyers to be treated as financial creditors: Government
New Delhi, May 25: In a huge relief for home buyers, the Central government on Friday said they would now be treated as financial creditors and would have a share in the proceeds earned by sale of assets of bankrupt real estate companies.
"Good news for home buyers: Now in situation of real estate companies going bankrupt, home buyers will have a share along with banks in the auction of assets of such companies," Finance Minister Piyush Goyal said in a tweet in Hindi.
"This decision will bring relief to lakhs of home buyers in the country," he added.
The Minister was apparently referring to an ordinance approved by the Union Cabinet on Wednesday making amendments to the Insolvency and Bankruptcy Code (IBC) and now awaiting the President's approval.
IT and Law Minister Ravi Shankar Prasad had then refrained from revealing details of the ordinance saying protocol prevented him from divulging more details before its approval by President Ram Nath Kovind.
Along with his tweet, Goyal shared a news article in Hindi about the Cabinet approval to the ordinance.
Earlier, the Insolvency Law Committee (ILC) set up by the Corporate Affairs Ministry had suggested that home buyers be treated as financial creditors to enable them to participate equitably in an insolvency resolution process.
The report of the 14-member committee, headed by Corporate Affairs Secretary Injeti Srinivas, that was made public last month had also suggested relaxations for micro, small and medium Enterprises (MSMEs) under the IBC which came into force in December 2016.
Recommending relief for home buyers stranded due to real estate projects left incomplete by promoters facing insolvency proceedings, the panel suggested home buyers be treated as financial creditors owing to the unique nature of real estate financing and their treatment by the Supreme Court in ongoing cases.
Notably, classification as financial creditors would enable home buyers to participate equitably in the insolvency resolution process under the Code.
Under the IBC, 'financial creditor' refers to any person to whom a financial debt is owed.
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Power tariffs under BESCOM to rise from May 1
Bengaluru (PTI): Power bills for consumers under the Bangalore Electricity Supply Company Limited (BESCOM) will go up from May 1, following an order issued by the Karnataka Electricity Regulatory Commission (KERC) on Friday.
The hike comes after KERC allowed the BESCOM to recover a revenue deficit of Rs 2,068 crore incurred in 2024-25, from the consumers.
As a result, for every unit of electricity consumed in 2024-25, the customers will be charged an additional 56 paise, it said.
"BESCOM shall calculate, for each of the active consumers of FY2024-25 the amount to be recovered based on their actual energy consumption during FY2024-25. Such amount shall be recovered during FY 2026-27 in equal monthly instalments, to be called as 'FY25 True up Charges', commencing from the first meter reading date falling on or after 1 May 2026 and concluding with the reading date ending on 30 April 2027," the order said.
"It is further ordered that BESCOM shall maintain a separate head of account, allocated for the purpose, to record the adjustment of the said amount to ensure full recovery of the deficit," it added.
Similarly Chamundeshwari Electricity Supply Corporation Limited (CESC) has also recorded a revenue deficit of Rs 121.71 crore and can collect an additional 15 paisa per unit for consumption in 2024-25, official sources said.
