Bengaluru: With the BBMP being on a mission demolition, over 1,940 properties are set to bite the dust in the city. Besides property owners, who have paid a heavy price for encroaching on lakes and storm water drains, several banks, which have advanced loans for these homes, are now gripped by uncertainty as recovery could prove difficult.
A top executive of the State Bank group says it is trying to identify loans given to homes in the areas that have been targeted by the BBMP’s bulldozers. “We have a set of legal advisors, who scrutinise the papers and check the financial credentials of the applicants through Cibil before we sanction the loans. We are very particular about the A khatha as we don’t give loans for B khatha (revenue) sites. Bengaluru being a difficult market with 75 per cent of the properties having no marketable legal papers, we go by the legal counsels, who take the A Khata as the deciding factor. But to our utter shock we have now learnt that A khathas have been issued for illegal properties as well,’’ he said, revealing that the bank had now decided to go slow on loan applications in new zones irrespective of the type of khathas the applicants produced.
While legal experts say most banks make sure loan applicants sign carefully drafted agreements covering situations such as the one now faced by several property owners in the city, they acknowledge they could end up losing all the money loaned should the borrower declare bankruptcy in these circumstances.
“Even if the building is demolished the borrower has to pay back the loan taken from the bank. There is no escaping this. But in the eventuality of the applicant going bankrupt, the bank will have no means to recover the money as the site, which is taken as collateral, is itself now declared illegal,’’ explained Mr Selvakumar, a leading advocate, who is on the legal empanelment of 21 banks in the city.
The worst is yet to come, in his view, as the real estate sector has taken a beating in Bengaluru, especially after the order of the National Green Tribunal(NGT) on buffer zones.
With the Koliwad committee also looking into lake encroachments, next on the list of evictions could be IT parks, malls and massive apartment complexes. Thousands of crorers of rupees have been pumped into these projects through capital investments and loans. I know of a mall in Whitefield , which took Rs 400 crore to build.
A large portion of the money came from a bank loan. Though the mall has been completed, the BBMP has refused to give it an Occupancy Certificate as it does not satisfy the buffer zone criteria set by the NGT. . The investor is therefore running out of money merely by paying the interest on the loan, as he hasn’t been able to lease out the shops,’’ he said.
As for the NGT order, he says there is a lot to be explained still. “Does it apply with retrospective effect or from the date of the order? Does the 75 meter buffer zone apply to all lakes irrespective of their size? Will the government demolish thousands of buildings that have come up on lake beds, which were converted into layouts by its own agency, the BDA? There is so much lack of clarity on all this . It’s a mess,’’ he regretted, warning, “from the banks’ and realty perspective there could be a bloodbath in the near future and ultimately it will be the home buyers who will bear the brunt.’’
Rehabilitate demolition hit: SHRC
The State Human Rights Commission (SHRC) registrar has shot off a letter to state chief secretary to provide food and accommodation to the distressed citizens, who have lost houses during a demolition drive by the BBMP to clear encroachments.
Following a complaint by T. Narasimhamurthy, the SHRC has directed the state government to rehabilitate and make basic amenities to them, instead of abruptly throwing them to the streets. This is the duty of the state or local self
government, the letter stated.
While the entire city was celebrating Varamahalakshmi festival, the mood was somber at Doddabommasandra, Kasavanahalli and Avani Sringerinagar where BBMP had carried out demolitions. Those who are set to lose the houses avoided any festivities. BBMP has stopped demolition drive until Monday owing to government holidays.
