Harassed homebuyers stop paying EMIs

Experts say move to make matters worse for buyers

Gautam Chatterjee, a buyer in Jaypee Wish Town’s Kosmos project, has stopped paying his equated monthly instalment (EMI) to ICICI Bank for an apartment he was supposed to start living in three years ago. 

He is not alone. According to the various homebuyers’ support groups of Jaypee Infratech and Amrapali Group, more than 1,500 buyers have stopped paying EMIs. Many because they know it is a bad investment and putting in more money would be futile, and others because it is becoming difficult for them to sustain the financial stress.

Experts, however, believe that stopping the payment of EMIs will only make matters worse for buyers. “In a situation of delayed possession, not paying EMIs may not be the right step. It will lead to banks declaring them as defaulters, which will further add to their existing woes. They should look for compensation for the amounts like rent they pay for not getting the delivery of their house in time,” said Neeraj Sharma, director, Grant Thornton Advisory.

But even after numerous calls from ICICI Bank asking him not to discontinue EMIs, Chatterjee has decided to stay on course. “I have had it. I have been paying EMIs like clockwork, but what has it got me, other than a financial strain? So, finally, a month back, I wrote to the top officials at ICICI, including Chanda Kochhar, the managing director and chief executive officer, and marked a copy to the developer. 

I told them I will not be able to pay the EMIs. I pointed out that the bank is also responsible as they are the ones who do the due diligence of such projects. I will start paying EMIs again as soon as I get the possession of the flat,” he said. Chatterjee had been paying his EMI of Rs 54,280 for the past four years. In addition to that, he was paying a rent of Rs 35,000. 

For Pankaj Gupta, a buyer in Jaypee Wish Town’s Kensington Park Apartment project, paying rent, EMI, lawyer’s fees and taking care of the family is becoming too much. He is the only earning member of a family of five. While he is paying Rs 67,000 as EMI, his rent is around Rs 21,000. He has been fighting a legal battle against Jaypee, which costs money as well. He has spent around Rs 30,000 on lawyer fees. 

“Till now, the fear of collection agents coming over and harassing me in office and home and my middle-class sensibilities were stopping me from not paying EMIs. But now, I have had enough. From next month, I will not pay EMIs. I’m also going to write to the bank. The toll this ordeal has taken on my professional and personal life has been immense,” he said. He, however, said he would start paying EMIs as soon as he is handed over the keys to his flat.

Homebuyers, who are thinking of stopping the payment of EMIs, are planning to approach the government in hopes of getting a reprieve. “We will approach the government and request them to talk to the banks and come to an understanding where paying of EMIs can be halted till some resolution is achieved. We have already paid a lot of money. They should look at this humanely and understand our plight. We are not the kind who would run away without paying our dues,” said Jay Prakash Gupta, a buyer in Amrapali Group’s Centurian Park project in Greater Noida West.

A number of banks have already started assessing the number of bad loans that can arise from buyers of the two developers not paying EMIs. 

Last month, State Bank of India (SBI) began a review of loans to buyers in unfinished projects by Jaypee Infratech and Amrapali. Rajnish Kumar, managing director (national banking group) SBI, said they were assessing the number of homebuyers who have been affected by the beleaguered projects.