Top business news of the day: Benchmark indices rise; World Bank not considering new china loans and more

A view of the BSE building in Mumbai. File

A view of the BSE building in Mumbai. File   | Photo Credit: PTI

News updates from the world of economy, markets, and finance

4:20 PM

Benchmark indices end higher as fewer new coronavirus cases bring global cheer

Sensex snapped two days of losses to end higher on Tuesday, as world stocks touched record highs after China's top medical adviser said the coronavirus epidemic may plateau in the next few weeks, Reuters reported.

In the domestic market, beaten down metal stocks were among the top gainers. The Nifty metals index closed up 0.87% as a slowdown in new coronavirus cases helped prices of base metals advance.

3:50 PM

Emerging Markets’ assets rise as pace of new coronavirus infections slows

Photo used for representational purpose only.

Photo used for representational purpose only.  


Emerging market assets rose on Tuesday, as demand for riskier assets picked up due to a slowdown in the number of new coronavirus cases, but analysts warned the optimism could be overstated, Reuters reported.

It seems that markets have assumed the worst is over with regards to the coronavirus,” said Piotr Matys, emerging markets FX strategist at Rabobank.

“But optimism that the virus is contained is overdone because we haven't seen concrete evidence, so we maintain a cautious view.”

Still, MSCI's index for emerging markets stocks rose 0.7%, following two days of declines, while its index for currencies gained 0.2%.

3:30 PM

Gold, Silver decline on weak demand

Representational image. File

Representational image. File   | Photo Credit: AP


Gold prices on Tuesday fell by Rs 112 to Rs 41,269 per 10 gram in the national capital on weak demand and selling in international market, according to HDFC Securities, PTI reported.

Silver prices also declined by Rs 108 to Rs 47,152 per kg from Rs 47,260 per kg in the previous trade.

3:15 PM

China steel traders hold off post-holiday buys as coronavirus saps demand

Picture used for representational purpose only.

Picture used for representational purpose only.  


Steel traders in China are holding off returning to the market for their usual post-Lunar New Year purchases, their appetites dampened by sluggish demand from a construction sector hit by the outbreak of a flu-like virus, Reuters reported.

Steel product inventories held by traders in China - at 16.33 million tonnes on Feb. 6 - are already at their highest since March 2019, data compiled by Mysteel consultancy showed, indicating they already have sufficient stocks.

“There's downward pressure on steel prices, which means mills' profits will be compressed,” said Richard Lu, an analyst with CRU metals consultancy in Beijing, adding that some mills will cut output out of profitability and supply concerns.

2:40 PM

Airbus confident of selling more than 1,000 of its long range aircrafts

Top business news of the day: Benchmark indices rise; World Bank not considering new china loans and more

Airbus SE is confident of selling more than 1,000 A321XLR aircraft, a longer-range version of the single-aisle A321neo jetliner, over the next 10 years, a senior executive at the manufacturer said on Tuesday, Reuters reported.

Mr. Caudron said airlines were not panicking and were looking beyond the short term in terms of orders.

“When you order an aircraft it is not for the next six months,” he said. “It is for the next 20 years.”

2:10 PM

World Bank not considering new China loans to fight coronavirus

File photo of World Bank President David Malpass.

File photo of World Bank President David Malpass.   | Photo Credit: Reuters


The World Bank is offering technical assistance to China to help battle the coronavirus epidemic but no new loans, the development lender's president, David Malpass, said on Monday, Reuters reported.

“China has its own large international reserves,” and new loans are not being considered at this time, said Mr. Malpass, a former Trump administration Treasury official who took over as World Bank president last April.

China reported that it held $3.115 trillion in foreign exchange reserves in January.

1:30 PM

Crude oil futures rise 1.07% on global cues

Image for representative purposes only

Image for representative purposes only   | Photo Credit: REUTERS


Crude oil prices on Tuesday rose by Rs 38 to Rs 3,579 per barrel as speculators widened positions tracking firm trend overseas.

Analysts said raising of bets by participants kept crude prices higher in futures trade here.

On the Multi Commodity Exchange, crude oil for delivery in February traded higher by Rs 38, or 1.07 per cent, to Rs 3,579 per barrel in 32,553 lots.

Crude oil for March delivery was up by Rs 35, or 0.98 per cent, at Rs 3,605 per barrel with an open interest of 1,320 lots.

Globally, West Texas Intermediate was trading higher 1.31 per cent at USD 50.22 per barrel.

Meanwhile, Brent crude, the international benchmark, edged up 1.50 per cent to USD 54.07 per barrel in New York. PTI

1:15 PM

Budget proposals on DDT, personal tax not to impact MF industry: Franklin Templeton

The proposed changes in Dividend Distribution Tax (DDT) and the new income tax system announced in the budget will not have any adverse impact on the mutual fund industry that showed resilience and maintained robust growth amid economic headwinds, a senior mutual fund official said.

After the Union Budget was presented on February 1, there had been some apprehensions on the growth of MF sector in the coming days.

Budget 2020 has proposed to make dividend income from mutual funds taxable in the hands of the recipient instead levying on companies and MFs, and withdrawn certain exemptions to get the benefit of lower tax slabs.

“Both DDT and new income tax proposals will not have any adverse impact on the mutual fund industry,” Franklin Templeton India director (sales) Peshotan Dastoor told PTI in an interview.

The quantum of investment through equity-linked savings scheme for tax purpose is just about two per cent amounting to around Rs 3,000 crore, out of the 1.4 lakh crore inflow in 2019, he said.

But, the share of investments in insurance plans is much larger for getting tax benefits. There are apprehensions that the new income tax proposals will not encourage people to invest for saving tax, the official said.

Investors in lower income brackets will benefit from tax announcement as they will have to pay lower tax against 30 per cent in the earlier regime.

Speaking about the DDT impact, Dastoor said, total portfolio in dividend category is less than 15 per cent of the total MF assets as the majority investors invest for three years and above for long term capital gains.

Moreover, the dividend has to be more than Rs 5,000 a year for tax deducted at source (TDS) on dividend and even then it can be claimed back by filing returns if their total income is not taxable.

In recent years, share of individual investors in the MF industry had jumped to 54 per cent in both equity and debt segment, Dastoor said.

The official said number of investors in direct plans had jumped, which constitutes 44 per cent of the assets under management (AUM).

“This share of the industry is expected to inch higher to 55-60 per cent given the trend led by the millennials who are investing through digital mode,” Dastoor said.

“The AUM of the Indian MF now stands at Rs 26.5 lakh crore, which is 20 per cent of the total banking industry,” he said.

In 2018, the AUM was Rs 22.86 lakh crore PTI

1:00 PM

Crude oil futures rise 1.07% on global cues

Crude oil prices on Tuesday rose by Rs 38 to Rs 3,579 per barrel as speculators widened positions tracking firm trend overseas.

Analysts said raising of bets by participants kept crude prices higher in futures trade here.

On the Multi Commodity Exchange, crude oil for delivery in February traded higher by Rs 38, or 1.07 per cent, to Rs 3,579 per barrel in 32,553 lots.

Crude oil for March delivery was up by Rs 35, or 0.98 per cent, at Rs 3,605 per barrel with an open interest of 1,320 lots.

Globally, West Texas Intermediate was trading higher 1.31 per cent at USD 50.22 per barrel.

Meanwhile, Brent crude, the international benchmark, edged up 1.50 per cent to USD 54.07 per barrel in New York. PTI

12:30 PM

Xi Jinping warned officials that efforts to stop virus could hurt economy

Chinese President Xi Jinping warned top officials last week that efforts to contain the new coronavirus had gone too far, threatening the country's economy, sources told Reuters, days before Beijing rolled out measures to soften the blow.

With growth at its slowest in nearly three decades, China's leaders seem eager to strike a balance between protecting an already-slowing economy and stamping out an epidemic that has killed more than 1,000 people and infected more than 40,000.

After reviewing reports on the outbreak from the National Development and Reform Commission (NDRC) and other economic departments, Xi told local officials during a Feb 3 meeting of the Politburo's Standing Committee that some of the actions taken to contain the virus are harming the economy, said two people familiar with the meeting, who declined to be named because of the sensitivity of the matter.

He urged them to refrain from “more restrictive measures”, the two people said.

Local authorities outside Wuhan - where the virus is thought to have first taken hold - have shut down schools and factories, sealed off roads and railways, banned public events and even locked down residential compounds. Xi said some of those steps have not been practical and have sown fear among the public, they said.

China's state council information office did not immediately respond to requests for comment.

The official Xinhua News Agency, reporting on the Politburo meeting last Monday, called the coronavirus outbreak “a major test of China's system and capacity for governance.” It added, without details, that “party committees and governments of all levels were urged to achieve the targets of economic and social development this year.”

Since the meeting, China's central bank has vowed to step up support for the economy and prepared policy tools to offset the damage. The NDRC said at a weekend briefing that it was urging companies and factories to resume work, especially in “key industries” such as food and pharmaceuticals.

“In the context of the epidemic and the downward pressure on the economy, it is more important to maintain economic growth,” Pan Gongsheng, vice-governor of China's central bank, said on Friday.

On Monday, Zhejiang province, an economic powerhouse in eastern China, ordered local authorities not to overreact by restricting everyday movement or shutting down “shops of chain stores and convenience stores that sell daily necessities such as vegetables, cooking oil as well as meat, eggs and dairy products,” according to a government release.

China has unveiled new tax policies as it tries to reduce the burden on industries hit heavily by the epidemic.

Reuters reported this month that policymakers in China are preparing measures, including more fiscal spending and interest rate cuts, amid expectations the outbreak will devastate first-quarter growth.

Many in China returned to work on Monday after the Lunar New Year holiday was effectively extended for about 10 days, but morning commutes were far less crowded than usual and numerous factories remained shut.

The ruling Communist Party's propaganda department last week ordered state media to focus on “economic recovery”, according to a person with direct knowledge of the order, who declined to be named because of the sensitivity of the situation.

China's official media has been trying to project calm. In a Monday editorial, the official People's Daily urged the public to deal with the epidemic with a “positive mood”. Reuters

12:15 PM

Indian shares rise as new virus cases drop, some Chinese businesses restart

Indian shares gained on Tuesday, on course to snap two sessions of losses, as the number of new coronavirus infections fell and some Chinese factories slowly resumed operations.

The broader NSE Nifty 50 index was up 1.01% at 12,141.25 by 0400 GMT, while the benchmark S&P BSE Sensex rose 1% to 41,390.50.

Asian shares opened higher after the U.S. markers closed at record highs. The MSCI's broadest index of Asia-Pacific shares outside Japan inched up 0.9%.

While the death toll from the coronavirus epidemic in China has climbed above 1,000, the 2,097 new cases on Monday were down from 2,618 the previous day as Chinese workers and factories slowly returned to work.

Global markets have moved ahead as they felt the virus would not impact them much in the long term, said Vinod Nair, head of research at Geojit Financial Services.

There are opportunities for India, and some sectors could also benefit from the generally lower oil prices, he added.

Global benchmark Brent crude has lost 7.3% so far this month as the coronavirus outbreak threatened demand from top consumer China.

In domestic markets, metal stocks were among the best performers, boosted by a more than 5% jump in Chinese iron ore and steel futures.

The Nifty metals index rose 1.2%%, with sector heavyweight Tata Steel gaining 1.4%.

State-owned banks also underpinned the bullish sentiment, with the Nifty PSU index rising about 1%.

State-owned gas producer GAIL (India) Ltd firmed 3.5% and topped the blue-chip gainers, followed by Tata Motors , which rose 3.4%.

Drugmaker Cipla Ltd was among the few laggards on the Nifty, as it fell 0.3%. Reuters

11:45 AM

Fed Chair Powell likely to give Congress largely positive economic update

Federal Reserve Chair Jerome Powell is likely to sound fairly upbeat about the outlook for U.S. economic growth when he testifies this week in the first of his twice-a-year updates to Congress, even as he nods to the potential threat from the coronavirus in China.

That assessment would echo the formal report the Fed submitted to the U.S. Congress on Friday, which repeated the central bank's view that its current target range for short-term borrowing costs, between 1.5% and 1.75%, is “appropriate” to keep the expansion on track.

Not just the message will be familiar; Powell will also be addressing a familiar crowd. His calendars show he has talked privately with most of the lawmakers set to publicly grill him this week. (Please see graphic

Indeed Powell has made lawmaker outreach a signature feature of his tenure. In just two years on the job, he has spent about 96 hours in private meetings, phone calls, group meals or study sessions with senators and members of the House of Representatives.

That compares with 77 hours for his predecessor, Janet Yellen, over her four years as Fed chair.

With risks like trade policy uncertainty receding, Powell has signaled he sees no reason to adjust U.S. interest rates unless there is a “material” change to the current outlook.

That's a view he is likely to reiterate when he presents the Fed's monetary policy report on Tuesday to the House Financial Services Committee and on Wednesday to the Senate Banking Committee.

“His message will probably be that, if rate cuts are coming, they would come solely in response to global disruptions associated with the virus,” said Robert Perli, an economist at Cornerstone Macro. “He will likely say clearly that the U.S. economy is inherently healthy.”

Investors will be watching carefully for any new details on the Fed's plans for its balance sheet and for the short-term funding markets into which it has been pumping liquidity to prevent a repeat of an unexpected spike in the policy rate last fall.

A letter some Democratic U.S. senators sent last week to Powell on the steps the Fed is taking suggests Powell could be in for some pointed questions on the subject. Reuters

11:30 AM

World Bank chief: some development banks worsening poor country debt burdens

World Bank President David Malpass on Monday chided other development banks for lending too quickly to heavily indebted countries, saying some were helping worsen already-challenging debt situations.

Malpass said at a World Bank-International Monetary Fund debt forum in Washington that the Asian Development Bank, the African Development Bank, and the European Bank for Reconstruction and Development were contributing to debt problems.

“We have a situation where other international financial institutions and to some extent development finance institutions as a whole, certainly the official export credit agencies, have a tendency to lend too quickly and to add to the debt problem of the countries,” Malpass said.

He said the Asian Development Bank was “pushing billions of dollars” into a fiscally challenging situation in Pakistan while the African Development Bank was doing the same in Nigeria and South Africa.

A spokesman for the Asian Development Bank could not immediately be reached for comment.

The Manila-based development lender in December approved $1.3 billion in loans for Pakistan, including $1 billion for immediate budget support to shore up the country's public finances and $300 million to help reform the country's energy sector.

The loans came as the country is struggling with billions of dollars in debt to China from Belt and Road infrastructure projects, which helped cause Pakistan to turn to the IMF for a $6 billion loan programme in 2019.

Malpass said there needed to be more coordination among international financial institutions to coordinate lending and maintain high standards of transparency.

“And so we have a very real problem of the IFIs themselves adding to the debt burden and, and there's pressure then I think on the IMF to sort through it and look at the best interest for the country,” he said.

Malpass also said that the new Beijing-led Asian Infrastructure Investment Bank was seeking to develop lending standards that were equal to those of the World Bank and was causing fewer problems than some of the more traditional development lenders.

Although China often gets blamed for burdening some developing economies through Belt and Road, Malpass said the country was looking for ways to bring its debt contracts in line with international norms.

One way to do this is to improve transparency in lending contracts, to eliminate non-disclosure clauses that have hidden liens and contingent liabilities that could hamper economic growth.

In an interview, Malpass cited liens against Angola's oil revenues associated with Chinese debt that were hidden by non-disclosure agreements, convenient for politicians and contractors.

“Let the people of the country see what the terms of the debt are as their government makes commitments,” Malpass said. Reuters

11:00 AM

Oil rebounds amid broad market recovery; investors still wary

Oil prices rose more than 1% on Tuesday in sympathy with a rally in equity markets but investors remained jittery over the Wuhan virus that has now killed over 1,000 in China.

Brent crude rose 70 cents, or 1.3%, to $53.97 a barrel by 0428 GMT, retreating from an intraday high of $54.13. U.S. West Texas Intermediate was up 61 cents, or about 1.2%, at $50.18 a barrel.

“A broad positive sentiment across Asia markets seems to have boosted crude oil prices,” Margaret Yang, market analyst of CMC Markets, told Reuters.

“The rebound is mild and might be short-lived as China's energy demand is likely to remain soft in the near term due to virus impact. OPEC+ and Russia will need to come out with a cohesive output cut plan to shore up oil prices,” she said.

The number of coronavirus deaths in mainland China have now reached 1,016, its National Health Commission said, and the number of cases has topped 42,600.

The virus has also spread to two dozen other countries, with the head of the World Health Organization (WHO) cautioning on Monday that the cases outside of China could be “the spark that becomes a bigger fire”.

Traders remain concerned that China's oil demand could take a further hit if the coronavirus cannot be contained. Chinese state refiners have already said they will cut as much as 940,000 barrels per day (bpd) from their crude runs in February due to the virus.

“China's refiners are processing 15% less crude and that could get a lot worse if the virus doesn't peak this month,” Edward Moya, senior market analyst at OANDA, told Reuters.

“OPEC+ appears to be stuck in a wait-and-see mode ... Russia can live with $40 oil (and) thus might not be so eager to play ball with the other OPEC+ members in delivering another 600,000 bpd in production cuts,” Moya said. Reuters

10:45 AM

Sundaram Finance Q3 PAT rises 4% to Rs 253 crore

Non-banking finance company Sundaram Finance Ltd on Tuesday reported a 3.8 per cent rise in consolidated profit after tax (PAT) at Rs 252.90 crore for the quarter ended December 31, 2019.

It had posted a consolidated PAT of Rs 243.64 crore in the year-ago period, Sundaram Finance said in a regulatory filing.

However, the consolidated income of Sundaram Finance declined to Rs 1,338.29 crore in the period under consideration, from over Rs 2,224.57 crore a year-ago.

In a statement, the Chennai-headquartered company said its net non-performing assets (NPA) stood at 2.09 per cent as on December 31, 2019.

The board of Sundaram Finance has declared an interim dividend of Rs 10 per share.

Set up in 1954, the Sundaram Finance Group’s services include financing for the entire range of commercial vehicles, passenger cars and construction equipment, as well as specially designed working capital products such as fuel finance and tyre finance.

Shares of Sundaram Finance were trading at Rs 1,685 a piece in morning trade on BSE, down 0.84 per cent from its previous close. PTI

10:30 AM

Yuan up as hopes pinned on stabilisation efforts to prop up virus-hit economy

China's yuan inched up against the dollar for a second straight session on Tuesday as investors hoped authorities would be able to contain a fast-spreading virus and limit the economic fallout of the epidemic.

The death toll from the coronavirus epidemic in mainland China soared past 1,000 on Tuesday with a record daily rise in fatalities, although the number of new confirmed cases fell. More than 300 Chinese companies are seeking bank loans totalling at least 57.4 billion yuan ($8.2 billion) to help cope with the disruption, two banking sources said.

China's central bank has pledged it would use tools to support key sectors, having already pumped billions of dollars into the money market to stabilise confidence. Traders also said sentiment was supported by comments from central bank advisor Ma Jun that China should consider lowering benchmark deposit rate to enable banks to reduce lending rates for businesses.

“We think a benchmark deposit rate cut would improve risk sentiment,” Gao Qi, FX strategist at Scotiabank said in a note. “The dollar/yuan is likely to fluctuate at around the 7.00 level for now and then trade lower as China's coronavirus situation will likely improve in the weeks ahead.” Reuters

10:15 AM

Rupee rises 10 paise to 71.20 against US dollar in early trade

The rupee appreciated by 10 paise to 71.20 against the US dollar in opening trade on Tuesday, driven by positive opening in domestic equities.

The rupee opened strong at 71.23 at the interbank forex market then gained further ground to touch 71.20 per dollar, displaying gains of 10 paise against the greenback.

On Monday, the rupee had settled at 71.30 against the US dollar.

Forex traders said positive opening in domestic equities supported the local unit, while rising crude prices, foreign fund outflows and strengthening of the American currency weighed on rupee and restricted its upmove.

The benchmark BSE Sensex was trading with gains of 420.26 points, or 0.99 per cent to quote at 41,399.88 while the NSE Nifty was trading at 12,157.55, up 126.05 points, or 1.05 per cent.

Foreign institutional investors sold equities worth Rs 184.58 crore on a net basis on Monday, according to provisional exchange data.

Meanwhile, brent crude, the global benchmark, was trading at USD 53.95 per barrel higher by 1.28 per cent.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose by 0.02 per cent to 98.85.

The 10-year government bond yield was at 6.44 per cent in morning trade. PTI

10:00 AM

Sensex surges over 400 points; Nifty reclaims 12,100

Market benchmark Sensex rallied over 400 points in opening session on Tuesday led by gains in index-heavyweights Reliance Industries, ICICI Bank and HDFC Bank amid a positive start to global equities.

The 30-share BSE index was trading 405.61 points or 0.99 per cent higher at 41,385.23, and the broader NSE advanced 123.10 points, or 1.02 per cent, to 12,154.60.

In the previous session, Sensex settled 162.23 points, or 0.39 per cent, down at 40,979.62, and the Nifty slipped 66.85 points, or 0.55 per cent, to 12,031.50.

Meanwhile, on a net basis, foreign institutional investors sold equities worth Rs 184.58 crore, while domestic institutional investors offloaded shares worth Rs 735.79 crore on Monday, data available with stock exchanges showed.

Tata Steel, Axis Bank, UltraTech Cement, SBI, IndusInd Bank, ITC and ICICI Bank were among the top gainers in the Sensex pack.

On the other hand, TCS was the only stock trading in the red.

According to traders, domestic stocks followed global equities, which rallied despite despite concerns over coronavirus impact on world economy.

The death toll in China due to the novel coronavirus epidemic has crossed 1,000, while the confirmed cases have gone over 42,000, health officials announced on Tuesday.

Bourses in Shanghai, Hong Kong and Seoul were trading on a positive note. Financial markets in Japan are closed on Tuesday for a public holiday.

Stock exchanges on Wall Street closed with significant gains on Monday.

Domestic market participants are also tracking Delhi poll results, traders said.

Meanwhile, the rupee appreciated 4 paise against the US dollar to 71.23 in morning session.

Global crude benchmark Brent rallied 1.39 per cent to USD 54.01 per barrel. PTI

9:45 AM

Opinion: China's carmakers could drive well in India

Chinese automakers are driving west looking for growth. As sales at home stall, Great Wall Motor has announced plans to invest $1 billion to enter India and to start production locally. Others will follow. Although the likes of Ford, GM and Fiat Chrysler have applied the brake, retreating in recent months, Chinese carmakers will have an edge over their sub-continental rivals as consumers look beyond small, affordable rides.

Sales of passenger cars contracted sharply in India last year on the back of new insurance and emissions standards but the potential for long-term growth is staggering: there were only around 20 cars for every 1000 people as of 2018. Unlike in China, where hundreds of competitors vie for attention, the industry is concentrated Suzuki Maruti accounts for roughly half of all passenger vehicle sales, suggesting there is room for others to share the spoils.

That's why the $9 billion Great Wall and peers like SAIC Motor and FAW Car were among 300 Chinese groups that signed up for the Society of Indian Automobile Manufacturers Motor Show in Greater Noida in Uttar Pradesh state this month. In January, Great Wall Motor snapped up GMs old factory when the Americans went into reverse.

Chinese carmakers could make their mark. They are more adept are making spacious sports utility vehicles, which are popular in China and increasingly appeal to affluent Indians ready to move on from more compact sedans. The latter remain best-sellers for domestic brands; however, utility vehicle sales, including SUVs, rose by 5% last year, despite the downturn, Society of Indian Automobile Manufacturers figures show. Western rivals had similar dreams to win the segment but the Chinese are able and willing to make cheaper cars, that will help the newcomers gain traction.

Prime Minister Narendra Modis drive for cleaner vehicles could be to their advantage, too. Beijings war on smog has accelerated the development of electric vehicles and hybrids in China. If Indians take to the new technology, the Chinese will be well-placed to compete with locals like Tata Motors which is also now launching battery powered cars. The road trip looks worthwhile. Reuters

9:30 AM

Insolvency to be limited to realty project concerned, not other group projects: NCLAT

In a relief to realty players, the National Company Law Appellate Tribunal (NCLAT) has held that any insolvency process initiated by a flat buyer or financial institution would be limited to the project concerned only and not impact other projects of developers. A NCLAT bench headed by Chairman Justice S J Mukhopadhaya said that the entire insolvency process initiated over the plea of either a flat buyer or bank or any other financial institution would be limited to the project only.

Besides, the appellate tribunal has also suggested that there should also be a reverse corporate insolvency process in such cases.

“In CIRP against a real estate, if allottees or financial institutions, banks or operational creditors of one project initiated CIRP against the corporate debtor, it is confined to the particular project, it cannot affect any other projects of the same real estate company in other places where separate plans are approved by different authorities,” the NCLAT said in its order.

The order came over a petition filed by group of allottees - Flat Buyers Association Winter Hills-77, Gurgaon.

The appellate tribunal also suggested that there should be “reverse corporate insolvency resolution process” in such cases, where insolvency process is initiated against a real estate company, no home buyer can approach the National Company Law Tribunal (NCLT) or the NCLAT to seek refunds for the project.

In case the flat owners of such projects wish to seek a refund for the particular project of the real estate company which is undergoing insolvency, they are open to sign an agreement, either with the interim resolution professional, or the promoter to find a new buyer and get the money back if and when that flat is sold, the NCLAT said.

“As we find it is very difficult to follow the process as in normal course is followed in a Corporate Insolvency Resolution Process, we are of the view, that a ‘Reverse Corporate Insolvency Resolution Process’ can be followed in the cases of real estate infrastructure companies in the interest of the allottees and survival of the real estate companies and to ensure completion of projects which provides employment to large number of unorganized workmen,” said the NCLAT.

Earlier, the Delhi-based Principal bench of the National Company Law Tribunal (NCLT) had on August 20, 2019 directed to initiate Corporate Insolvency Resolution Process’ against Umang Realtech.

This was challenged before the NCLAT by a group of allottees - Flat Buyers Association Winter Hills-77, Gurgaon - contending that the project in question, will be completed by the end of Diwali (October, 2019).

According to them, just because of the plea of two allottees, insolvency was triggered. PTI

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