New Delhi, April 10 Strengthening India's real estate insolvency framework needs a fundamental shift from entity‑level resolutions to a project‑centric model that prioritises completion and delivery of homes, a report said on Friday.
The report from ICRA called for strengthening coordination between the Insolvency and Bankruptcy Code, 2016 and the Real Estate (Regulation and Development) Act, 2016 to achieve this transition.
The Committee on Framing Guidelines for Insolvency Proceedings in the Real Estate Sector submitted its report to the Insolvency and Bankruptcy Board of India earlier this week.
The report highlighted the need for a shift from an entity-centric, recovery-focused framework to a project-centric, completion-driven approach with stronger coordination between both laws, said Manushree Saggar, Senior Vice President and Group Head, Structured Finance, ICRA Ltd.
“While the RE sector has the second-highest share in cases referred under the IBC, RE insolvency also presents unique challenges, as it has a higher social cost and directly affects large numbers of homebuyers,” she added.
Hence, project completion and delivery of homes is a more desirable outcome than financial recovery, Saggar noted.
The report highlighted 55 key issues affecting RE insolvency and has made 155 recommendations, covering structural, procedural and institutional aspects of the framework.
These recommendations are aimed at improving efficiency, ensuring timely completion of projects, enhancing stakeholder confidence, and strengthening alignment between insolvency processes and sectoral regulation.
They seek to harmonise insolvency law with real estate regulation, judicial guidance, and constitutional values, ensuring that the Code functions as an instrument of resolution rather than prolonged uncertainty.
“In ICRA’s opinion, better alignment between insolvency processes and real estate sector-specific regulations could improve efficiency and enable timely completion of projects, which in turn would enhance stakeholder confidence,” she said.
Ongoing and resolved insolvency cases together affect nearly a quarter of a million homebuyers, translating into housing insecurity for close to a million individuals when household size is considered.
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