House prices may drop in Mumbai but not Gurgaon

The Grand Arch, Gurgaon

The Grand Arch, Gurgaon

High prices, lower demand and liquidity issues may pull house prices lower in Mumbai, while lack of new launches will likely push the prices higher in Gurgaon, said Bank of America Merill Lynch in a research report.

Property prices in Mumbai have appreciated 14 percent (CAGR) in the last decade and the most affordable project within Mumbai is upwards of Rs 10,000 a square foot, according to the report. This means for a 2BHK apartment, the price will be at least Rs 1.5 crore.

“This trend is unsustainable and prices in Mumbai will have to correct and remain subdued over next 2-3 years. This will allow improvement in affordability as income levels catch up with residential prices,” said Abhishek Kiran Gupta, real estate analyst at Bank of America Merrill Lynch.

Unable to sell homes at current market prices, builders are now offering smaller cheaper homes to lure buyers. While no builder has officially cut base prices as yet, several discount schemes and freebies are on offer. For example, several Mumbai-based builders are offering

discounts through 20:80 schemes, stamp duty waivers, floor rise waivers and

other freebies to attract buyers. The 20:80 model is where the buyer pays up to 20 percent of the entire amount as advance, while the rest is paid only when the flat is ready.

Read more: First Post

Banking

Axis Bank launches special home loan scheme for self-employed

The third largest private sector lender Axis Bank today launched a dedicated home loan product for the self-employed.

At 1 per cent above the base rate to start with, borrowers will pay higher than the ones in the salaried class, but lower than the going rates in the market, Axis Bank’s head for consumer lending and payments Jairam Sridharan said.

“The self-employed category is definitely riskier than the salaried class. However, we have a clause under which prompt payment will reduce the interest outgo and get a self-employed borrower at par with a salaried one in five years,” he said, adding the initial rate for such borrowers will be 11 per cent.

The interest rate will get reduced by 0.25 per cent each in three phases at the end of the second, third and the fifth year, he said, adding, at 0.25 per cent over the base rate, a self-employed person will be at par with a salaried borrower by the fifth year.

The bank is primarily targeting traders and small businessmen, Sridharan said.

He said over half of the country is self-employed and this segment faces trouble getting bank loans, forcing them to approach NBFCs and pay higher interest rates.

At present, the borrowers from this class build a good credit history in two-three years and migrate to lower priced home loans from a bank, he said.

However, he conceded that the home loan segment is witnessing a dip in growth due to overall troubles in the economy, but added it continues to grow for his bank without giving any figures, citing pre-results silent period.

Source: The Economic Times

Bankers press for 50 bps cut in CRR to ease liquidity pressure

In the Annual Policy scheduled to be announced on May 3, bankers also want the repo rate to be pared.

Reserve Bank of India should cut the cash reserve ratio by 50 basis points in its Annual Policy to ease the liquidity pressure, say bankers.

In a pre-policy consultation meeting with the central bank top brass, bankers represented that in view of the tight liquidity situation the RBI should cut the CRR.

CRR is the slice of deposits that banks have to park with the RBI. Currently, this reserve ratio is at 4 per cent of deposits. A reduction in CRR will release liquidity and help banks reduce lending rates.

The RBI is scheduled to announce its Annual Policy on May 3. In the run-up to the Policy, the central bank is holding consultations with various stakeholders.

S. S. Mundra, Chairman and Managing Director of Bank of Baroda, said: “We have asked for a 50 basis points CRR cut. The deposit growth has been slightly lower than the RBI’s projection (of 15 per cent growth in FY13). Though liquidity was tight till now, it should improve.”

Besides the CRR cut, bankers also want the repo rate (the interest rate at which banks borrow short-term funds from the RBI) pared. However, looking at the present liquidity situation there was more emphasis on CRR cut, Mundra said after the meeting.

Read more: Business Line

NRI

Change in tax status? Register it!

Have you, an NRI, decided to become an Indian resident? Or has your minor daughter attained the age of 18? Any such change in status would have to be updated at the KYC Registration Agency (KRA) as well as in your mutual fund folios.

Forms from KRA

Forms are available for updation of personal particulars at the Web sites of the KYC Registration Agencies. The section “New Status” should be filled in and submitted to the intermediary — Mutual Fund (or their Registrars)/Depository Participant. If the nationality of the applicant has changed, it should be indicated in the field “Nationality”. The supporting documents required — including proof of overseas address in cases of change to NRI and proof of local address in case of change to Resident — are mentioned in the form. Investors may submit the same to the intermediary.

If this is done, the change in address will be automatically changed in the records of the mutual funds in all folios across all funds where the KYC Status has been updated.

Informing the fund

Tax status and contact details such as telephone numbers and email ID will have to be communicated separately to the respective mutual funds/registrars for updation in their records.

Bank details of investors who change their status from Resident to Non-resident would have to be updated to NRO. Similarly, for those whose status has changed to Resident, the Savings account details would have to be updated in the folio. The complete bank details should be furnished in the request letter and the copy of cancelled cheque with the investor name pre-printed therein of the new bank is to be enclosed. Investors may check for details of any additional proof documentation or requirement with the mutual fund.

Read more: Business Line

Infrastructure

Some momentum, at last

Battling a tough year, the ministry of road transport and highways has wrapped up the financial year 2012-13 on a satisfactory note. Overcoming several road blocks, the government has managed to construct 15 kilometres of highways per day during the year. Though short of the ambitious 20-km-a-day target set by the government under the national highways development project, this represents a sharp increase of more than 4 km a day over prior year.

Speedier construction has come as a big relief for the ministry which otherwise had nothing much to boast about in a particularly bad year plagued by project delays and poor investor interest in new projects.

Implementing agency for national highways, the National Highways Authority of India (NHAI), saw very few projects being taken up by developers during 2012-13 under the public-private-partnership (PPP) mode.

In FY13, highways construction and expansion increased to 5,800 km as against 4,955 km in FY12. Out of the 5,800 km, nearly a half, 2,840 km, was completed by the NHAI. Interestingly, NHAI’s performance has also shown an improvement as against construction of 2,248 km in FY12.

Sources said both NHAI and agencies undertaking projects under the ministry have improved their performance. “The sector is directly impacted by the slowdown and thus the bidding of new projects has taken a direct hit. Though our focus was on construction we have still managed to achieve the highest target ever”, said an NHAI official.

Read more: Financial Express

Cash rich Piramal set to invest Rs 1000 crore in road and renewable energy projects

India’s battered infrastructure sector has found a much-needed backer in billionaire businessman Ajay Piramal. After shying away for long, his eponymous flagship Piramal Enterprises is in the process of investing over 1,000 crore in the sector in two separate structured transactions.

With the money backing road and renewable energy generation projects, Piramal’s move may appear contrarian to many, especially since these segments have been pitfalls for many high-street investors and even banks.

To start with, last week, Piramal’s Structured Investment Group, which handles the proprietary investments for the diversified pharma to financial services conglomerate, has invested 550 crore via optionally convertible instruments like debentures in Navayuga Road Projects Pvt Ltd (NRPL), the road subsidiary of the 3,000 crore Navayuga Engineering Company (NECL).

The Hyderabad-headquartered NECL is 88% owned by the promoter family led by C Visweswara Rao while 11% is owned by specialised infrastructure-focused private equity fund 3i Group.

The road portfolio includes eight annuity and build-operate-transfer (BoT) projects with a total project cost of 8,700 crore.

Read more: The Economic Times

East Delhi

DDA’s next: Stronger foundation for ‘dangerous’ buildings in East Delhi

After 70 per cent of all buildings on Yamuna floodplains were declared structurally unsafe in a survey by Central Building Research Institute, Delhi Development Authority (DDA) is about to hire a consultant to help in retrofitting or reconstructing ‘dangerous or unsafe’ buildings in the city. Most of these buildings are in East Delhi.

Pilot projects for retrofitting will be carried out in five areas. Three or four buildings will be reconstructed in each of these pilot projects. Retrofitting involves strengthening the foundation of unsafe buildings. This increases the earthquake resistance of the building.

“The five areas where pilot projects will be carried out are Lalita Park, Gandhi Nagar, Kondli, Lal Kuan and Fatehpur Beri. We are going to hire a consultant to tell us how to go about retrofitting or reconstructing these buildings,” DDA spokesperson Neemo Dhar said. All of these areas have witnessed building collapses in the past. The DDA has created a special cell to manage these projects, in accordance with the Lieutenant-Governor’s recommendations.

Read more: Financial Express

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