Chandigarh, August 28
Urban development authorities in Punjab are set to assume a financial role. After bailing out the cash-strapped Punjab government by mortgaging its properties to get a Rs 2,000 crore loan for the government, these cash-rich organisations of Punjab will now bail out realtors from the red.

The Punjab Cabinet cleared a new policy at its meeting two days ago. It empowers PUDA to finance real estate developers so that they can pay up change in land use charges (CLU), licence fee and external development charges (EDC). Though the matter was not a listed agenda item in the Cabinet meeting, it was brought in by the Housing Department for the approval of the council of ministers and later given the go-ahead by the Cabinet.

The council of ministers was reportedly told in the Cabinet meeting by deputy CM Sukhbir Singh Badal, who also holds the housing portfolio, that at least six developers — one in Mohali, four in Amritsar and one in Bathinda — are unable to pay their EDC, CLU, Social Infrastructure Fund (SIF) and Urban Development Fund. Hence, there was a need to amend the ‘Land Owners Become Partners Policy’ of the government. It is learnt that the proposal to amend the policy, wherein a development authority finances the developer by taking his land as collateral security, was proposed by EMAAR MGF, which is developing a project in Mohali.

Under the amended policy, the development authorities (Punjab Urban Development Authority, Amritsar Development Authority and Bathinda Development Authority) will be bailing out developers by either extending them a loan or by arranging a loan for them from banks, for paying up the required charges.

The justification given is that under the original ‘Land Owners Become Partners Policy’, the land owners (could be individual or big real estate developers) have given the urban development authority the right to develop the land. As a result, when PUDA approached various banks to give loans to the developers, the banks refused to do so, claiming that the loanee could only be the development authority.

As a result, the Punjab Cabinet has now okayed that the above-mentioned charges would be borne by the urban development authorities out of their ESCROW fund (account in which funds are accumulated for specific disbursement).