Banks tighten norms for loans to real estate firms

Sunny Verma, New Delhi
 The Financial Express 

Inflation management by RBI coupled with tight liquidity situation has put a squeeze on bank credit to the real estate sector. Banks have tightened lending to real estate companies fearing possible defaults on repayments and increased risks perception of developers amongst lenders. Commercial banks have not only doubled the collateral requirements for real estate companies but also charge higher interest from these companies to protect their loans.

Lenders are asking for security or collateral of at least 300 percent — up from 150-200 percent until recently — while lending to even top notch realty companies, bankers said. In addition, the real estate companies seeking bank finance are able to borrow funds at hefty 15 percent plus, they said. Interest rate charged to blue chip companies is much higher compared to lending rate of PSBs to their prime clients in other sectors, wherein funding is available at starting rate of 9.5-10 percent.

While rising policy rates by RBI have pushed up debt costs, a deteriorating credit worthiness and increase in unsold inventory across markets have resulted in a sharp jump in interest costs for the real estate sector.

Economy

India auto sales still growing
The Wall Street Journal

NEW DELHI – Maruti Suzuki India Ltd., Tata Motors Ltd., Hero Honda Motors Ltd., Mahindra & Mahindra Ltd. and Bajaj Auto Ltd. posted higher sales for April even as a rise in vehicle prices, fuel costs and loan rates hurt customer sentiment.

Growth in vehicle sales at most auto makers was slower in April than the previous month as several companies raised prices to offset the impact of higher raw material costs. Also, borrowing costs are rising as the central bank increases interest rates to tame inflation.

Indian Space Research Organization (ISRO) builds India’s fastest supercomputer
IBN Live

Bangalore: Indian Space Research Organisation has built a supercomputer, which is to be India’s fastest in terms of theoretical peak performance of 220 TeraFLOPS (220 Trillion Floating Point Operations per second).

The supercomputer SAGA-220, built by the Satish Dhawan Supercomputing Facility located at Vikram Sarabhai Space Centre (VSSC), Thiruvananthapuram at a cost of about Rs 14 crore was inaugurated by K Radhakrishnan, Chairman ISRO at VSSC today, ISRO said in a statement.

The new Graphic Processing Unit (GPU) based supercomputer, “SAGA-220” (Supercomputer for Aerospace with GPU Architecture-220 TeraFLOPS) is being used by space scientists for solving complex aerospace problems.

Infrastructure


Mumbai’s next development plan may be ready by 2016
Sharad Vyas, Mumbai
 The Times of India 

After months of dilly-dallying, the BMC finally gave an extension to a consortium of Indian and French urban planning companies chosen by the civic body to prepare Mumbai’s next development plan (DP). The 30-month extension came in the face of frequent delays, the plan scheduled to be completed by 2012 now, according to a rough estimate, may be ready only by 2016. However, the “official deadline” is still 2014.

The company had in February backed out from the task, just a month after commencing work. This development delayed the process by a few months. “For several reasons, the plan has been delayed over the last few years. Now that things are in place we hope it could be completed on time,” said a senior BMC official.

PMC to improve road network through PPP
Pune
 The Times of India (Pune edition) 

The Pune Municipal Corporation has decided to increase and improve the road network of the city through public-private partnership (PPP), rather than making the entire expenditure through civic budget. The civic budget 2011-12 says that the city has just about 7 percent of road network, while ideally it should be 15 percent. This is the biggest cause of traffic congestion, it adds. Additional city engineer Vivek Kharwadkar said that the civic body is preparing a road network plan and is considering alternative methods of financing road projects.

Chandigarh Metro project: Top officials meet May 5
Nishu Mahajan, Chandigarh
 The Pioneer 

The ambitious metro rail project of Chandigarh would move a step closer to become a reality, when representatives from Delhi Metro Rail Corporation would meet the UT top brass on May 5 and would also inspect the proposed metro lines in the Tri-city. The work for metro rail project would finally kick off on ground on May 5 with officials of DMRC visiting the city to work out the aspects including alignment of the metro corridors, location of metro stations and lines in the City Beautiful.

Infra funds make a beeline for India
T. E. Raja Simhan, Chennai
 The Hindu Business Line 

India-specific infrastructure funds from abroad and in the country are queuing up to invest large sums. There are 13 India-specific infrastructure funds targeting an investment of nearly $7.3 billion in projects. Nine funds are set to be launched in 2011, according to a report. Due to a lack of sustainable infrastructure, majority of funds unsurprisingly target invest in greenfield and brownfield projects, according to a recent report from UK-based Preqin. Preqin said while 22 deals were finalised in Indian infrastructure assets in 2010, the country attracted the third highest (after the US and the UK) number of infrastructure deals with 103 deals being completed between 2004 and 2010. Of this, nearly 80 percent of the deals completed by unlisted infrastructure fund managers in India were in energy, transportation, telecommunications and utility sectors. Other important sectors include logistics and social assets such as education and healthcare facilities.

Hospitality

Best Western eyes expansion
Hrithik Kiran Bagade, Bangalore
 Deccan Herald 

Best Western India, Indian chapter of world’s largest hotel chain — Best Western International, is planning big expansion. The chain, which already boasts of 18 operational hotels in the country, will add 12 more to become a 30-hotel chain. These new properties are expected to open by the year-end. Best Western, which arrived in India in the earlier part of 1990s, has grown rapidly.

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