DSK Defaults: Now homebuyers getting notices from lenders to pay pre-EMIs
Moneylife Digital Team 17 August 2017
The financial anarchy at DS Kulkarni Enterprises is becoming messier day by day. After defaulting on repayments to thousands of investors, DS Kulkarni & Co, a subsidiary of DS Kulkarni Developers Ltd, had stopped paying all pre-monthly instalments as per agreement for the home loan taken by buyers in its projects. Since DS Kulkarni & Co has defaulted in repaying the instalments, buyers are being asked by the lenders to pay pre-EMIs within seven days that too when there is no guarantee that the project would be completed on time or no. 
 
Pune-based right to information (RTI) activist Vijay Kumbhar, who has been leading the fight of fixed deposit holders in DSK, shared one such notice with Moneylife. In the notice, Tata Capital Housing Finance Ltd, says, "Under the promotional scheme launched by the Developer (DS Kulkarni & Co- for its DSK Chaitraban project at Pirangut near Pune), the said Developer had offered to make payment of the pre-monthly instalment interest (MII) on your behalf to us with respect to the home loan facility availed by you. Notwithstanding such arrangement, you being the borrower under the home loan agreement are liable to make payment of such pre-MII/MI. This is to bring to your notice that the Developer has defaulted in making payment of the pre-MII. In view of the aforesaid default, we hereby call upon you to make payment of the outstanding pre-MII within a period of seven days from the date of this notice..."
 
 
Our mail sent to Mr Kulkarni remained unanswered till writing this story. We will update this story with his response as and when we receive it.
 
Earlier in June 2017, CARE Ratings reduced its rating to CARE D from CARE C with negative outlook on the non-convertible debentures worth Rs111.59 crore and fixed deposits of Rs33.86 crore issued by DS Kulkarni Developers. "The revision in the rating of instruments is on account of inability of the company to service its interest obligations on due date on Option I and Option IV of its Non- Convertible Debentures as per the company’s intimation to Stock Exchange. The likely delays are on account of deterioration in overall financial risk profile and stretched liquidity position of the company," the ratings agency had said, while explaining rational behind the downgrade. 
 
The issue here is not the lender calling to make payment, but the borrower being asked to make payment for a project that is under-construction or may never get completed due to the default of the developer. The most prominent reason in such cases is the builder or developer's inability to meet financial obligations for completing the project. Many a times, it was found that the developer had used the advance payment collected from buyers to purchase another land or to invest in other project. In addition, several developers are facing legal issues that make life difficult for ordinary buyers. 
 
Especially, those who had taken a home loan had no other option but to repay it irrespective of whether the project will be completed or no. Even when there is a delay in construction, the buyer has to keep paying EMIs without even knowing when it will be completed. This is double whammy for home loan borrowers as they are not sure if they will ever get possession of their dream house and yet had to meet to repayment obligations. 
 
The lender may be right claiming that as per the agreement, the borrower has to repay the loan along with interest. However, in cases like DSK where the developer has agreed to pay interest part or pre-EMIs, there could be a tri-party agreement between the developer, buyer and the lender. In such cases, why only the buyer is being made to pay the instalments for no fault of his/her? Why cannot the lender initiate action against the developer, who failed to meet its obligations?
 
There are thousands of borrower facing similar issues. Hope their voice reaches to the authorities soon and there is some action. 
Comments
Shrikant Jadhav
4 years ago
Dear Sir/Madam,

Do you have any thoughts/solution about how the home buyer should approach to DSK and TATA Capital in this case.
Abhishek Singh
4 years ago
The problem is the social pressure to buy a house at any cost. One wouldn't even buy clothes without having a look at final product but are ready to invest in under construction house. There must be much more restrictions on selling under construction houses.
Pradeep Kumar M Sreedharan
Replied to Abhishek Singh comment 4 years ago
It is beyond any common with one or even College degrees to figure out all the rules, regulations, tricks and cheating involved in a real estate game. One may please refrain from blaming the hapless home owning aspirant
Pradeep Kumar M Sreedharan
Replied to Pradeep Kumar M Sreedharan comment 4 years ago
Common man with one or more College degrees
chintan.mokashi
Replied to Pradeep Kumar M Sreedharan comment 1 year ago
RBI and the regulatory authority NHB had issued an advisory to Housing Finance Companies NOT to give Finance in fancy schemes like subventions scheme. Commercial Banks clearly avoided these schemes. But companies like Tata Housing Finance have flouted the advisory and released funds directly to DSK. Now in such cases Supreme Court in Amrapali case observed that the financier should recover from the builder and not harass home buyers. Shouldn’t they be held responible?
Ezeelok
4 years ago
DSK is a crook & criminal of the highest order. Aided , abetted and led by his equally criminal wife has cheated so many investors , lenders , friends & relatives alike. They have forged signatures , opened fake accounts , stolen money from partners , cheated many many in good faith. It's shocking that no Govt Agencies have taken cognizance of this family's naked cheating. DSK Bunty Bubbly Duo have probably been bribing Police & Bureaucrats for getting favours of not being arrested. Very soon a bigger scandal of DSK Family Business will surface involving thousands of Crorers falsified by them. Their intra-company ledgers must be seized , cash loan receipts on back-side of photos of Saptashringhi Vani Devi and Veer Savarkar etc will shock authorities for benami transactions. Many Govt orders have been forged & fabricated. Investor must act fast to get control of Prooerties through court receivers as the Family is at Final Stage of secret transaction with Few Sahukars by collecting cash for personal gain and allow Property control to Sahukars. Investors are folks to believe this Sweet Tongue Duo.
Shirish Sadanand Shanbhag
Replied to Ezeelok comment 4 years ago
Eazeelok ji, don't be so excited in making the complaint against any wrong doer or even criminals, unless you have proof to prove their wrong doings.
Otherwise, these wrong doers will drag you to the court of law for defamation. They have good advocates to defend their side.
Shirish Sadanand Shanbhag
4 years ago
Why flat buyers don't complain against D.S. Kulkarni Builder, to MahaRERA?
chintan.mokashi
Replied to Shirish Sadanand Shanbhag comment 1 year ago
Easier said than done. RERA is a toothless tiger with no power to enforce its orders. Many DSK victims have approached RERA but a bunch of bureaucrats sitting on top have riggled out and refused to give any relief.
Ezeelok
Replied to Shirish Sadanand Shanbhag comment 4 years ago
That's baffling. Equally worrisome is no SuoMotto action by Govt. Looks like some politicians & Bureaucrats are shielding crooks for obvious reasons that their Benami & ill-gotten wealth may have been parked with this builder.
Pradeep Kumar M Sreedharan
4 years ago
I wonder, how many home buyers rushing in to prepay (if at all any) know that even a fully paid for home will be lost, if the builder borrowed against the home first.
ganesh babu
4 years ago
Big Investor Porinju has entered in the scrip in a bigway. Whether he is holding still or reduced his position?
Dayananda
4 years ago
Whether RBI &NHB were sleeping when such schemes are being introduced. It is a clear case of misuse of lower interest for housing finance to individuals by builders,for which they are not entitled.
So they are enjoying cheap credit in the name of flat purchaser,
At least now they will ask every developers to prepay the instalments till the date of giving possession so that the scam can be stopped right now before it escalates. And a penalty is levied on all financial which have collaborated in this scam
chintan.mokashi
Replied to Dayananda comment 1 year ago
RBI and the regulatory authority NHB had issued an advisory to Housing Finance Companies NOT to give Finance in fancy schemes like subventions scheme. Commercial Banks clearly avoided these schemes. But companies like Tata Housing Finance have flouted the advisory and released funds directly to DSK. Now in such cases Supreme Court in Amrapali case observed that the financier should recover from the builder and not harass home buyers. Shouldn’t they be held responible?
ROMIT KATDARE
4 years ago
This incident should serve as a warning to future investors against going for such innovative schemes floated by builders.

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