Banks that have financed customers for purchasing apartments at the five illegal apartment complexes in Maradu have started drawing up the list of their debtors for realisation of the loans.
The Supreme Court had on Wednesday ordered the demolition of the five apartments, which came up in violation of the Coastal Regulation Zone rules, in 30 days and report back.
It is estimated that there are around 300 housing units in the five apartment complexes, which have to be razed in 30 days. A large number of the apartment owners purchased the flats by obtaining loans from banks. In some cases, banks may have funded the builders too for constructing the apartment complexes.
Banks have started taking stock of the situation and identifying the customers who took the loans. The State Bank of India funded around 10 customers in these flats and it appeared that most of the projects were financed by new generation banks, said a senior functionary of the SBI Retail Assets Central Processing Centre, Kochi.
Once the building is demolished, the net value of the building, which was shown as the collateral security for the loan, becomes zero. Any default in payment of loans and zero value of the mortgaged property would be render it as a Non-Performing Asset.
Such a situation will force the banks to initiate legal steps for the realisation of the loans, explained the official. The banks would approach the Debt Recovery Tribunals or courts for realising the loans, and in the process, will move civil courts for attaching the movable or immovable properties owned by their debtors, explained a legal officer with a private sector bank.
Transaction not possible
Once attached, the debtor will not be able to sell or transact the property till he clears the loan. In the case of salaried employees, the banks may approach the employers for realising the loan amount. The banks may also go to courts for attaching the salary of the defaulters, she explained.
It could be a long-drawn process for the banks as they will have to identify the other properties owned by their debtors and realise the money. For the housing projects, which were funded by the banks, the official said, cases would be filed against the builders for cheating and also for realising the money. The customers may also sue the builders for cheating, she said.