A bill that seeks to recognise home buyers as financial creditors under the insolvency law will be introduced in the ongoing monsoon session of parliament, which began today.
The decision was taken today at a meeting of the Union Cabinet, chaired by Prime Minister Narendra Modi, Law Minister Ravi Shankar Prasad told reporters here.
The bill seeks to replace the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018, which was promulgated by President Ram Nath Kovind last month.
The bill aims to provide significant relief to home buyers by recognising their status as financial creditors. This would give them due representation in the Committee of Creditors (CoC) and make them an integral part of the decision-making process.
Further, home buyers would be able to invoke Section 7 of the IBC against errant developers, sources said. Section 7 allows financial creditors to file application seeking insolvency resolution process.
The move comes at a time when many home buyers are facing hardships on account of delayed and incomplete real estate projects.
The amendment in the IBC also seeks to benefit Micro, Small and Medium Enterprises (MSME) sector by according them a special dispensation under the Code.
Earlier on May 23, the Cabinet had cleared promulgation of an ordinance to amend the IBC.