Latest Property News on 'Banking and Finance'

SBI, Unitech mull PE realty fund

Just a week after the State Bank of India (SBI) announced a $2 billion (Rs8,100 crore) infrastructure fund with Australia’s Macquarie Group, the nation’s largest lender is set to tie up with an affiliate of Unitech Ltd, the country’s second biggest publicly traded real estate company, to float a private equity (PE) real estate fund. A senior SBI executive said the state-run bank has signed a preliminary agreement with New Delhi-based Unitech Realty Investors Ltd for the proposed fund, but the bank is yet to get the board approval.

The executive didn’t want to disclose the size of the fund. SBI’s anchor investment in the real estate fund is yet to be decided. “We want to be in areas where we are not,” said Deepak Chawla, a deputy managing director at SBI, in charge of corporate strategy and new business. Unitech Realty Investors manages Rs3,000 crore of money under three domestic funds and one foreign fund. The company invests only in Unitech’s developments. Mint couldn’t ascertain whether the SBI-Unitech fund will invest only in Unitech’s developments or in those of other companies too. Read More »

A New Reality For Realty Mutual Funds

At last, the decks have been cleared for the launch of Real Estate Mutual Funds (REMFs) in India, with the Securities and Exchange Board of India (SEBI) notifying amended regulations for such products last week. For mutual fund investors, this may mean a welcome relief from the stream of new equity fund offerings, playing on every imaginable theme, that have clamored for attention over the past three years. But don’t hope for this to happen too soon!

It may be some time before fund houses queue up to offer REMFs with the same enthusiasm that they now display for equity funds. Though SEBI’s recent notification clarifies some of the grey areas in REMF regulations relating to valuation and disclosures, getting such products off the ground may prove to be quite a challenging exercise for the existing fund houses. Read More »

REITs to grow globally at USD 1,400 billion: ASSOCHAM-CRISIL

The Real Estate Investment Trusts (REITs) would have potential to hold at least 5% share of the total global real estate market by 2010, the size of which would turn to USD 1,400 billion in next 3 years, according to joint paper prepared by the ASSOCHAM and CRISIL.

The paper namely Indian REITs ; Are We Prepared, says that by 2010, REITs alone would hold a market size of USD 70 billion of the total real estate market as its concept is gaining ground in countries like India and other developing nations. The basis for the projections is based on gross state domestic produce (GSDP) estimates for 2003-04 and an average annualized yield of 10%. Read More »

Realty Mutual Fund’s income to be out of Tax Net

The uncertainty over the tax-treatment of real estate mutual funds is set to end soon. The government will exempt from tax the income generated by mutual funds which float schemes which aim to invest mainly in the stocks of realty firms. According to a senior revenue department official, real estate MFs and other MFs that invest in shares of realty companies will be spared of paying tax on all income. The dividend income of unit holders who buy these products to reap the gains of a realty boom will also be tax-free.

“Sebi-registered real estate mutual funds will be given a tax pass-through status if they invest the money raised from investors in shares of real estate companies. So will be the case for all mutual funds investing in shares of realty companies,” said the official. Read More »

RBI advises Bankers to give last chance to Defaulter to Repay their Loans

The Reserve Bank proposes to make it mandatory for banks to give loan defaulters one last opportunity to repay before taking possession of the mortgaged property.

In its second draft guidelines on recovery agents released today, RBI said the re-possession procedures should follow the “letter and spirit” of the Indian Contract Act and must provide borrowers a final chance to settle loan dues before sale or auction of the mortgaged property by banks. Read More »

SBI MF to launch Real Estate Equity Fund

The SBI Mutual Fund on Thursday filed the offer document with the Securities and Exchange Board of India for launching a dedicated scheme for the real estate and related sector.

The objective of Magnum Sector Funds Umbrella (MSFU) Real Estate Equity Fund is to provide investors opportunities for long-term growth in capital through an active management of investments in equity and equity-related instruments (including derivatives) of companies in the realty and similar sectors and in debt and money market instruments, the offer document said.

The open-ended scheme would be available in Retail and Institutional Plan with growth and dividend options. Under the dividend option, facility for reinvestment and payout of dividend is available, it said. Minimum investment under the retail plan is Rs 5,000 while under the institutional plan, it is Rs 5 crore. Read More »

Direct tax collections up over 40% till February 2008

The government said that the direct tax collections have grown more than 40% at Rs 2,326.76 billion till February 2008 this fiscal. The amount collected by the income-tax department was 41.70% higher than the corresponding figures during the previous year.

The revised estimates in the Budget 2008-09 has raised the collections from direct taxes, comprising income-tax, corporate tax, FBT, STT and BCTT, to Rs 3,044.45 billion from the Budget estimates of Rs 2,671.75 billion. Read More »

Reverse Mortgage Scheme Should Be Repackaged

Clarification in tax treatment in the Union Budget 2008-09 could save the reverse mortgage scheme from sinking. Launched with much fanfare and touted as a savior for the growing population of senior citizens in the country, the scheme failed to take off in a big way owing to lack of proper packaging and appropriate information dissemination to the target group.

Many senior citizens, retired from work and with limited savings, have to fall back on their sole property, the one they live in, to generate income. Read More »

Indian Budget 2008 stands a model for the world

Indian Budget 2008 stands as a model with focus on development for the world and most apt for emerging economies. This budget is both transformational and historic with respect to the treatment it offers on social, economic, gender, educational, culture, inclusive growth, class equality and developmental issues.

Some elements of the budget will continue to create positive and exponential network effect on the economy over several decades like the financial market infrastructure and its cross –linkages to the rest of the economy and the announcement of a green exchange. Read More »

Removal of Tax Sops for SEZ’s

The Empowered Group of Ministers (eGoM), under the Chairmanship of the Union External Affairs Minister, Mr. Pranab Mukherjee, is meeting here on February 4 to examine the merit of the Finance Ministry’s plea for removing a slew of tax exemptions provided to the Special Economic Zone (SEZ) and their developers.

Sources in the Government told that the Finance Ministry has drawn the attention of the eGoM on the revenue loss on account of tax exemptions to units in SEZs which has been estimated to be Rs 1,02,621 crore for the period 2006-07 to 2009-10. Out of this, the revenue loss due to direct taxes is reckoned to be Rs 53,740 crore and on account of indirect taxes Rs 48,881 crore. Read More »