Greater Noida authority relaxes the penalty norms on builders of stalled projects
To reduce the financial burden on the cash-strapped builders, the Greater Noida Industrial Development Authority (GNIDA) has decided to temporarily forgo the premium penalty levied on the delayed construction of housing projects. Until now, the authority charged 10 percent of the premium penalty upfront and the remaining in instalment.
Typically, a premium is the cost at which GNIDA makes the land transfer to a developer. In case, the builder fails to complete the project within the stipulated time; the authority levies a penal charge of 1-2 percent per month. Besides, since the authority allocates the land parcels on a 90-year leasehold, it also imposes monthly rentals.
However, the recent announcement by the authority of relinquishing the penalty charges for a temporary period has offered immense relief to developers. According to Narendra Bhooshan, Chief Executive Office, GNIDA, developers are not only relieved from the hefty financial burden but also given a chance to avail funds from the financial institutions as soon as they clear the principal dues. However, they have to settle construction penalty at the time of the availability of the Occupancy Certificate (OC).
Besides, the Uttar Pradesh government also has extended benefits under the zero period policy and has ordered GNIDA to recalculate the penal amount for construction delays. Presently, the premium for land allotment and rent arrears form the most significant part of developers’ dues.