Don’t stop paying EMIs for Jaypee flats, bankers advise home buyers

NEW DELHI: Amid the chatter among several homebuyers in Jaypee Infratech projects to stop paying equated monthly instalments (EMIs), bankers are advising those who have borrowed for flats, villas or plots to ensure timely loan repayment.

"Stopping EMIs is not an option. Any default or delayed payment will only spoil the credit profile of the borrower. A default will make the borrower ineligible for future bank funding and issue of credit cards," said the head of the home finance business at a leading private bank.

Payment history of borrowers are maintained by credit information bureaus based on data shared by banks. The credit score is a key determinant for banks sanctioning loans and there have been instances where even Rs 250 due on a credit card has affected a lending decision.

While banks such as SBI were wary of lending to projects along the Noida-Greater Noida and the Taj Expressways, most lenders — from HDFC and ICICI Bank to IDBI Bank and Axis Bank — have provided home loans.

A banker said that as long as the repayment is normal the loan will be treated as a "standard asset" but a default for over 90 days will result in it being classified as a "non-performing asset". The lender explained that the loan exposure is to an individual and not the projects and the insolvency proceedings against the builder does not impact the credit profile of an individual's loan, unless repayment is affected.

Around 30,000 homebuyers in Jaypee Infratech projects are jittery over the fate of their units in the wake of insolvency proceedings initiated by IDBI Bank.
Bankers, however, said there is little possibility of insolvency given the statements coming from the government and insolvency resolution professional, appointed by the National Company Law Tribunal (NCLT). "IRP is making an endeavour to ensure that development of project continues," it had said in a set of frequency asked questions on Thursday. Bankers across banks and home finance companies said that in the past, even for smaller project a lender-driven package or one from the home owners had always been worked out and insolvency was a remote possibility.

Yet, several individuals who have booked apartments are asking if they will be required to repay the loan due in case of insolvency.

Bankers said that the liability would remain with the borrower, who would have to clear the dues. But they quickly added that this was a really remote possibility given the large number of individuals involved.