Department of town and country planning (DTCP) revises policy for recovery of external development charges (EDC)

[dheerajjain]

Source: Times of India
Date: April 28, 2012
http://articles.timesofindia.indiatimes ... nstalments

GURGAON: The department of Town and Country Planning ( DTCP) has announced a revised policy for the recovery of pending external development charges (EDC) and interest dues from builders in case of default in payment of scheduled instalments and relief in terms of approvals or permissions after securing additional bank guarantee.

The policy will be applicable to all licensed colonies of the state except those falling in the Gurgaon-Manesar Urban Complex for the time being. In case of "reputed builders", the EDC payment can be made in regular instalments at 15 to 18% interest. For newcomers, the entire EDCs are charged in lump sum to ensure timely payments.

According to builders, the policy is to give a fair chance to cash-crunched builders who have been unable to pay their EDC instalments. However, this may lead to increased cost for the end users.All references to "overdue EDC" in this policy may be read as "overdue EDC including overdue enhanced EDC and interest or penal interest dues thereon".

According to the new policy, any renewal or approval under the present policy shall be considered only if all other government dues like the IDC, renewal fee and scrutiny fee are cleared by the licensee. In addition, the licensee will pay the future instalments of EDC and enhanced EDC as and when they become due.In the case of renewal of licences, irrespective of overdue EDC, they would be considered under the present policy subject to submission of additional bank guarantee for 25% of the gross overdue EDC on the date of grant of such approval.The bank guarantee shall be valid for a period of 15 months from the date of such approval. The bank guarantee shall not be released in parts. The entire bank guarantee shall be released in one go after the receipt of such overdue EDCs.

There would be an undertaking from the licencee to clear the overdue EDC in four quarterly instalments spread over a period of one year from such approval.The policy, according to Navin Raheja, president of the National Real Estate Development Council (NAREDCO), is a win-win situation for both the developers, who might be facing shortage of funds and escalation in bank interest rates, and the end user. "Any project which might be stalled for the non-payment of EDC, which in turn delays NOCs, etc can be continued under this new policy as the developer can partly pay for the bank guarantee and pay the rest as instalments, ensuring timely delivery," explained Raheja.

Important points highlighted:

1. Govt. is NOT playing fair game. Making difference between 'reputed' builders and new builders which sounds illegal to me. Lobbying by DLF, Unitech, BPTP etc. at expense of smaller builders?

2. This leads to further increase in EDC charges for end users

3. Good thing to note is project delivery will not be stalled in spite of non-payment of EDC as developers given an option to pay in bank guarantees and installments.