The Cabinet on Tuesday finally approved the Real Estate Regulatory Bill after reviewing it for the second time. It mandates developers to keep 70% of the buyers’ funds in a separate bank account (escrow account) to ensure that money is used for that project itself and is not diverted for execution of older projects or debt reduction. Launch of new projects can be announced only after getting all relevant clearances and pre-sale launch without regulatory approvals is also restricted now.
MR Jaishankar, CMD of Bangalore based realty company Brigade Enterprise favours these moves, but feels they will push liquidity needs of developers up and translate into a cost addition of nearly 3-4 percent. To stop misuse of buyer’s money periodical inspections by authorities is a must. If another institution is set-up to regulate funds, developers will have to shell out additional fees, which will again add to the cost and will consume more time, he adds.
This bill in the present format has been drafted only from the perspective of developer- customer relationship, but it should have a wider purview and should also cover development and acquisition aspects, Dhawal Mehta of Wadia Ghandy & Co said.
Developers will have to sell property based on the carpet area. But, according to the Income Tax Act, a built-up area for any realty project includes thicknesses of walls of that building but, carpet area does not include wall’s thicknesses. Given this confusion on the definition of carpet area, measurements should have been given based on the built-up area than carpet area, adds Jaishankar.
Read more: Money Control
Developers to design sale contracts with buyers under govt model
The Real Estate (Regulation and Development) Bill, cleared by the Union Cabinet yesterday, wants all developers to design their sale contracts with buyers, based on a model agreement to be prepared by the government.
“It will be a standardised agreement but a balanced one, and states will have an option to modify it,” Minister for Housing and Poverty Alleviation Ajay Maken said today. The Bill, in the making for about five years, is expected to be tabled in Parliament in the monsoon session.
The real estate sector has remained unregulated so far. The Bill aims to safeguard buyers against unscrupulous builders and check the delays in realty projects, a common trend. Moreover, it would try to bring in a transparent environment.
The Bill, which has proposed setting up a regulator for the sector, will enable more funds to flow into realty as banks and financial institutions will not be wary of lending to developers now, Maken said.
As many as 22 states, including Madhya Pradesh, Gujarat, Andhra Pradesh and Rajasthan, have supported the Bill, the minister said. It provides for a clear definition of carpet area and would prohibit private developers from selling houses or flats on the basis of an ambiguous super area.
Read more: Business Standard
Steps taken by govt to revive growth this fiscal: Rajan
Finance Ministry today exuded confidence that recent initiatives of the government will push economic growth rate in the current fiscal and made a case for quick passage of reforms legislations like the GST and insurance bill to improve investor confidence.
“Increasing the growth rate is what we intend to do. And overtime the measure which have already been taken will also start kicking in, which will increase the growth rate,” Chief Economic Advisor in the Finance Ministry Raghuram Rajan told reporters here.
The economic growth in the January-March quarter stood at 4.8 per cent and for the full fiscal it was at decade’s low of 5 per cent. As per the Finance Ministry’s estimates the economic growth rate in the current financial year was likely to be 6.1-6.7 per cent.
The government is not satisfied with the 4.8 per cent GDP in March quarter, he said and hoped that good rabi crop and accelerated government spending would catapult growth.
“There are a number of pieces of legislations which has to be passed. If we can summon up for the passage of GST, insurance and companies bills that could be a signal to domestic and external investors that there is a forward movement. So legislations help growth by enhancing investor confidence,” Rajan said.
Rajan further said the overall WPI inflation is showing signs of easing and efforts should be made to bring down food inflation. The WPI in April stood at 4.89 per cent.
Read more: Business Line
IFC, Axis Bank join hands to support small businesses
International Finance Corporation (IFC) is partnering with private lender Axis Bank to support trade financing requirements of Indian exporters.
This will help Indian exporters access markets globally and boost the country’s international trade.
IFC will support Axis Bank’s trade finance business by providing partial or full guarantees covering payment risk of its clients.
“IFC’s trade finance facility will support Axis Bank’s ability to help small businesses tap growth opportunities,” said Sidharth Rath, President, Treasury and Business Banking, Axis Bank.
“With wider access to IFC’s global network of partner banks, we aim to facilitate trading transactions of our customers at low risk.”
IFC’s Global Trade Finance Programme was launched in 2005 mainly to increase the share of developing countries in global trade.
Under the programme, IFC has globally provided $23 billion in credit guarantees for more than 26,000 trade transactions. Axis Bank is an existing client of IFC.
In December 2011, IFC had provided Axis Bank with a $60 million credit facility for financing renewable energy and energy efficiency projects.
Read more: Business Line
Indian job market shows signs of improvement since start of 2013
The Indian professional job market has improved since the start of this year, with 59 per cent of Indian companies are currently recruiting at senior level, up 19 per cent over the beginning of the year, a survey says.
According to multi-national recruitment firm Antal International’s Antal Global Snapshot’ survey, employment trends has found that the professional job market in India as well as globally has improved since the start of 2013.
The percentage of Indian companies recruiting at managerial and professional level has increased by 19 per cent and now stands at 59 per cent. This is a real improvement on the 43 per cent of companies that were expecting to hire in the previous survey.
This optimism is predicted to continue, with 65 per cent intending to hire at this level within the next three months, according to the survey.
Meanwhile, figures for firing trends, however, are up on the previous survey from 20 per cent to 28 per cent of companies letting people go. Around 26 per cent of businesses expect to see redundancies at senior levels go in the next three months, the survey added.
Read more: The Economic Times