The monsoon session of parliament has begun and it is expected that a bill seeking recognition of home buyers as financial creditors under the insolvency law will be introduced in this session.
The decision was taken at a meeting of the Union Cabinet, chaired by Prime Minister Narendra Modi, Law Minister Ravi Shankar Prasad told reporters here.
The bill will seek to replace the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018, which was promulgated by President Ram Nath Kovind last month.
Recognition of homebuyers as financial creditors is something the homebuyers have been wanting for long as 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.