Month: February 2013

SBI raises fixed deposit rates by 0.25 per cent

27  Feb 2013, PTI.

NEW DELHI: State Bank of India (SBI), the largest bank of the country, on Wednesday announced increase in interest rate on fixed deposits by 0.25 per cent on select maturities.

Of the total 9 maturity periods for fixed deposits, rates have been revised upwards in 4 categories with maturities of over one year.

The new rates would be effective from March 1, SBI said in a statement.

With the revision, the interest rate on 1-2 years fixed deposit would go up to 8.75 per cent, from 8.50 per cent.

Similarly, term deposit 2-3 years, 3-5 years and 5-10 years would also earn higher interest rate of 8.75 per cent.

However, the bank has left interest rate unchanged for deposits less than 1 year.

Earlier this month, the bank had cut lending rate by 0.05 per cent, soon after the Reserve Bank cut its key policy rates.

After this marginal reduction, SBI’s base rate, or the minimum rate of lending, came down to 9.70 per cent from 9.75 per cent effective February 4.

In its third quarter policy review on January 29, RBI had lowered key short-term lending rate by 0.25 per cent and also injected Rs 18,000 crore liquidity through similar reduction of Cash Reserve Ratio.

The repo rate, at which RBI lends to banks, was eased after a gap of nine months as the central bank fought the stubbornly high inflation through tight money policy, leading to high interest rate regime.

Over 50 developers to participate in Indian Property Show

21, Feb 2013, PTI.

DUBAI: Over 50 Indian realty players will showcase properties, including luxury housing and commercial spaces, at an exhibition in Doha later this month.

The exhibitors at the ‘Indian Property Show’ would include real estate developers, construction companies, banks and real estate agents, Sumansa Exhibitions, who are organising the event, said.

The show will showcase thousands of properties from across the country, it said, adding that it will provide a platform for direct interaction between developers and potential property buyers.

“Indian Property market is a hot investment option even today and the sentiment is echoed by all the developers back in India as the enquiries and purchases by NRIs have kept on increasing,” said Sunil Jaiswal, CEO of Sumansa Exhibitions.

Jaiswal said demand for residential property will remain strong because of the improving business climate and the depreciating value of rupee, which is attracting NRI to make investments in the real estate sector.

“Big cities such as Delhi and Mumbai are still offering good returns but smaller, satellite cities such as Pune, Gurgaon and Noida have emerged as key destinations for investments,” he added.

The exhibition would have seminars highlighting properties by various developers, Sumansa Exhibitions said.

Developers will be showcasing apartments, villas, row houses, commercial & retail properties and farm land from across the Indian cities like Delhi, Noida, Greater Noida, Gurgaon, Jaipur, Mumbai, Navi Mumbai, Pune, Chennai, Bangalore, Ahmedabad, Kochi and other cities, it added.

Super-size terraces Bangalore’s status symbol

18 Feb 2013, TNN.

BANGALORE: A super-size terrace is the new luxury buzzword in this city. Large semi-open spaces attached to penthouses and million-dollar (upwards of Rs 5.5 crore) condos, that can be used as sit-outs, private green spaces or party areas, is the latest fancy of the gilded class here.

For example, an upcoming luxury apartment development, 77° Sky by DivyaSree, in South Bangalore, is offering buyers terrace spaces anywhere between 1,032 sqft and 1,662 sqft, equivalent to the area of standard one-bedroom and two-bedroom flats. The smallest terrace space being offered — 545 sqft — can fit six Innova cars, while the largest — 1,144 sqft — can fit almost 10 of President Obama’s super limos.

In some luxury developments, terraces come with a view and a pool. Located in North Bangalore, overlooking the Hebbal lake, Embassy Lake Terraces offers terrace spaces in the range of 770 sqft to 1,364 sqft per apartment. “Villas in the Sky, that’s what developers are offering those who can afford it,” says Ram Chandnani, deputy MD, South India, CBRE South Asia, a global consultancy firm.

In central Bangalore, Kingfisher Towers-Residences at UB City, being developed by Prestige Estates Projects, has terraces spanning approximately 600 sqft per apartment. Barely two kilometres away, developer Nitesh Estates is constructing an ultraluxury apartment development, Nitesh Park Avenue, which has terrace spaces above 600 sqft per apartment.

“What’s the meaning of luxury if you pay more than a million dollars and cannot enjoy Bangalore‘s fantastic weather?” asks Amit Bagaria, chairman, Asipac, a development management consultancy firm. Bagaria conducted a survey of luxury homebuyers and found the two things buyers wanted in a milliondollar apartment were large terrace spaces and floor-to-ceiling glass windows for more natural lighting.

A recent report by real estate consultancy firm L J Hooker (India) says that Bangalore has 52 projects under various stages of development, which have residential units priced above Rs 2 crore — of these, 25 are luxury apartment developments.

“Today, the customer is very conscious of his environment. He wants the convenience of an apartment as well as the luxury of the open space of a garden/ terrace where he can entertain,” says Mayank Ruia, head of residential, at Mumbai-based Phoenix Mills Limited. Phoenix has launched an ultra high-end development residential project in North Bangalore, wherein approximately 10 per cent of the apartment’s carpet area has been given to terrace space. “No two terraces face each other, offering complete privacy,” adds Ruia.

Terraces are becoming a regular feature in the premium apartment segment too, priced between Rs 75 lakh to Rs 2 crore, says Prashanth Sambargi, partner at Mars Realty, a real estate consultancy. “An average of 150 sqft to 250 sqft of semi-open area per apartment is the new design concept for all developers,” he says.

While Bangalore’s weather is the biggest reason for buyers wanting terrace spaces, the city’s stable pricing regime enables developers to pass on such luxuries to buyers. “Prices in Mumbai and Delhi are way too exorbitant for developers to offer such luxuries and also the weather in the two cities is not conducive to having such open spaces. So that’s what makes the trend in Bangalore unique,” says Chandnani of CBRE South Asia.

HDFC Bank sees interest rates softening by 50-75 bps

Feb. 18 2013, Business Line.

Interest rates are likely to soften by 50-75 basis points in the year ahead, according to Aditya Puri, Managing Director, HDFC Bank.

When asked about what the Reserve Bank of India’s interest rate policy stance should be after the Union Budget, Puri said, “Interest rate is not the panacea or the cause (for economic growth).

“Yes, it (lower interest rates) can help if inflation comes under control, which to an extent has and we saw some transmission with the 25 basis points cut (in RBI’s key policy rates).”

If the fiscal and current account deficit comes down during the course of the year then there could probably be another 50-75 basis points cut in the policy rates, he said on the sidelines of HDFC Bank’s credit card launch.

In a lighter vein, Puri said “Only the RBI Governor or God would know (when the rate cuts would happen).”
Deposit growth

On the slowdown in deposit growth rate in the banking sector, Puri said deposit growth is linked to inflation.

In the absence of debt market, private equity and venture capitalist culture, the primary burden on financing India’s growth is on banks. So, deposit accretion is crucial.

“To some extent personal savings have gone down and to control inflation, money supply has also been increased only by about 13.5 per cent. Hence, it is unlikely that deposit growth will be very much higher.

“We would like inflation to be under control or little bit more liquidity coming into the system and a level-playing field vis-à-vis mutual funds.”

Dishonouring cheque given as security cannot be held liable: Apex court

February 17, 2013: Business Line

The rule that a cheque should not be dishonoured on presentation at the pain of being penalised is not cast in stone.

The Negotiable Instruments Act itself contemplates the presumption of a cheque having been issued for consideration or discharge of debt being amenable to rebuttal.

In Vijay v. Laxman, the Apex Court was satisfied with the statement of the respondent as corroborated by a witness that he did issue a cheque for Rs 1,15,000 but only as a security for advance payment towards milk to be supplied by him to the appellant’s father. The milk having been supplied, he had demanded the cheque given as security back but was refused.

In fact, it was this very cheque that was presented and a case filed for its dishonour. The Supreme Court was satisfied that the appellant had, with a view to wrecking vengeance, given an altogether different colour to the transaction by calling it a loan for which there was no evidence.

In the event, the Apex Court upheld the High Court judgment that the cheque was given only as a security and not in repayment of loan and hence its dishonour was not liable to be visited with a penalty under Section 138.

EPFO likely to raise interest rate on retirement savings to 8.50% for 2012-2013

16 Feb 2013, ET Bureau.

NEW DELHI: The retirement savings of over six crore formal sector workers are likely to fetch a dividend of 8.5% for 2012-13 – marking a marginal increase from the 8.25% paid on employees’ provident fund (EPF) savings last year.

The Central Board of Trustees of the Employees’ Provident Fund Organisation (EPFO) is expected to ratify the proposed EPF rate on February 25, after the board’s finance and investment committee refused to discuss the proposed rate at its meeting on Friday. Committee members told ET that they told senior PF officials to take the interest rate proposal to the Board since the underlying income estimates were not shared with them prior to the meeting.

The panel, however, cleared a proposal to liberalise investment norms for private sector bonds. Though EPFO can invest upto 10% of its fresh inflows into such corporate bonds, it had put onerous restrictions on the companies that can qualify for investments. These conditions include a minimum 26% shareholding by a public sector company — a norm only a handful of firms can meet.

The finance committee has agreed to do away with some of the restrictions and allow investments in bonds issued by any company that has a net worth of at least Rs 3,000 crore and has been paying a dividend of at least 15% for the previous five years. The board will now have to take a call on whether a cap must be imposed on the foreign shareholding level of companies whose bonds could be considered for investments.

Though EPFO expects to earn a net income of Rs 21,147 crore in 2012-13 on its Rs 263,000 crore corpus of PF savings, it has earmarked Rs 350 crore from this income to update PF accounts for previous years. There are 38 lakh accounts that haven’t been updated till 2010-11 . The EPFO has stated that 8.5% is a ‘feasible’ PF rate for this year as any rate above that would lead to a deficit.

Source: Economic Times

Hyderabad is the world’s second most affordable office market: Survey

14 Feb 2013, ET Bureau.

BANGALORE: Hyderabad is the world’s second most affordable office market after Surabaya in Indonesia, according to a survey, while Chennai and Pune are at fifth and sixth positions, reinforcing India’s reputation as among the cheapest destinations for foreign firms to set up operations.

“Tier II cities in China and India continue to dominate the list of top-10 most affordable markets globally,” said a survey by consultancy firm DTZ, which measured occupancy costs per workstation in 126 business districts across 49 countries in 2012.

“2012 has seen office space absorption rates across Indian cities drop by a fifth. We expect the office space absorption to be stable in the current year, driven by signs of overall improvement in global and domestic economies. Rentals are also expected to appreciate across the country,” said Rohit Kumar, head of research at DTZ India.

According to the survey, it costs companies between $2,620 (about Rs 1.41 lakh) and $9,810 (Rs 5.27 lakh) per annum per employee in the top six Indian cities to set up operations, compared with $23,500 (Rs 12.63 lakh) per workstation in London West End.

China’s Chongqing and Nanjing, followed by Cancun in Mexico, also figure among the ten most affordable markets. As per the report, a majority of markets in North Asia and India saw a 2-10 per cent rise in occupancy costs. This has forced occupiers in many markets to increasingly consider secondary space, particularly where prime space is limited to cut cost.

The total commercial office space absorption for the quarter ended December 2012 was 6.8 million sq ft, a decrease of 19 per cent compared with the previous year. Vacancies across cities are expected to rise in 2013, except Bangalore, a recent report by DTZ India said.

“Companies continue to consolidate and relocate to less premium locations. Many firms are now looking to cut real estate costs, which comprises 22-27 per cent of the total operational expenditure, the second biggest component after human resource,” said Sridhar Raghavendra, founder of FM Zone India, a real estate and facility management firm.

GE Capital exits mortgage business in India

13 Feb 13, Business Line.

GE Capital India has exited mortgage business in India with the completion of sale of its housing finance arm and also its entire home loan portfolio (held through another entity) to Magma Group. The mortgage business was operated under the GE Money brand.

Magma Advisory Services, a group company of Magma Fincorp, has acquired 100 per cent equity share capital of GE Money Housing Finance. In addition, it has acquired the entire home loan and home equity portfolio of GE Money Financial Services Pvt Ltd.

As on end January 2013, GE Money Housing Finance had a home loan portfolio of Rs 540 crore. The home loan portfolio of GE Money Financial Services stood at Rs 810 crore.

Although the deal value had not been made public, both the transactions have resulted in gains for GE Capital India, it is learnt.

“Our mortgage business was profitable. Due to a strategic realignment, and a strong focus on commercial finance and credit cards, we decided to move out of that space in India. We ran the mortgage business until we found the right partner and price for it”, said Anish Shah, GE Capital’s President and CEO in India.

The exit from mortgage loan business is in line with the GE Capital’s strategy to focus on growing its credit card joint venture (with State Bank of India) and its commercial finance businesses in India, he said.

Within commercial finance, GE Capital has offerings in corporate loans, leasing, healthcare finance and private equity.

“We are exploring faster growth in areas like factoring and distribution finance that leverage GE’s global product and process strengths,” Shah said.

Launch pad

According to Sanjay Chamria, Vice-Chairman and Managing Director of Magma the acquisition would enable the company to launch its mortgage business and provide it with a platform to enlarge its bouquet of products. The acquisition would help it gain access to around 10,000 existing customers, he added.

Provident Housing Ltd forays into Mangalore

11 Feb 2013, PTI.

BANGALORE: Provident Housing Ltd, a wholly- owned subsidiary of the real-estate developer Puravankara Projects Ltd, is foraying into Mangalore with the launch of its property ‘Skyworth’.

“The Provident proposition with its dual emphasis on affordability and quality has been extremely well-received in other markets. We are delighted to bring this ‘premium affordable’ innovation to Mangalore,” Group CEO Jackbastian K Nazareth said in a statement here.

The property is located on a hilltop which furnishes all its apartments with panoramic “sky-vistas”, he said.

Provident Skyworth entails two bedroom apartments of 1091 square feet, priced at Rs 39.22 lakhs and three bedroom apartments of 1,377 square feet, priced at Rs 48.07 lakhs (prices are inclusive of open car-parking), Nazareth said.

These ‘premium affordable’ homes are of uncompromising quality, he added.

The company is embarking on similar initiatives across major cities including Mumbai, Delhi, Hyderabad, Coimbatore, Mysore, Pune, Baroda, Ahmadabad, Kolkata, Nagpur and Jaipur, Nazareth said.

CREDAI hails infra status move for affordable housing

5 Feb 2013, ET Bureau.

Welcoming Union Housing Minister Mr Ajay Maken’s move to accord infrastructure status to affordable housing, realtors’ apex body CREDAI called for extending similar treatment to the entire housing sector.

“We are happy that the Centre has come half way through on the developers and customers’ demand for according infrastructure status to the housing sector to facilitate easy financing and other benefits and to give a much-needed boost to the most important need of a man after food and water,” said Mr. Lalit Kumar Jain, National President of CREDAI.

CREDAI – Confederation of Real Estate Developers Associations of India – has over 10,000 members and associations in 20 cities across the country.

Mr. Jain said Mr Maken, in his speech in Mumbai at an international conference, has made a good beginning and “we hope he will move further in a positive direction.”

CREDAI has been relentlessly campaigning for infrastructure status for housing sector, declaring it as an industry and creation of special housing zones with tax reliefs on the line of SZEZ,” Mr Jain pointed out.

He expressed the hope that the State Government will take note of Mr. Maken’s suggestion to increase FSI limits so as to encourage housing for slums that sprang up in central locations.

“We have been stressing that nobody would like to be displaced from the area where one has grown up and has his source of income there. Relocating such people – who are in millions – will only lead to added pressure on the existing infrastructure like travelling,” Mr. Jain argued.

Half of Mumbai lives in slums and the solution to housing shortage is manifold. Mass rental housing for the benefit of people with transferable jobs and those who cannot immediately buy houses of their own, affordable housing for low income groups and economically weaker sections with enhanced FSI limits and special housing zones on the outskirts like Navi Mumbai and Thane and Mira-Bhayander are some of the solutions that CREDAI has suggested.

CREDAI has also put forth a plan of action to the government to come with realty reforms covering banking and administration. Affordable finance for affordable housing sector and speedy or single-window system of clearances, automation of the project clearance process to eliminate human interaction that causes corruption are among the steps that CREDAI suggested.

Mr. Jain expressed the hope that the Centre will follow-up with Mr. Maken’s welcome move and announce some pragmatic and practical measures to give boost to the housing sector.

Housing, along with construction industry, contributes as much as 11% to the GDP and supports some 400 industries which can substantially multiply if supported with proactive policies. Hence revival of housing sector is vital for rejuvenating the national economy, he added.

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