Saturday, October 31, 2009

Base rates will help make credit pricing transparent

The base rate system is definitely more transparent than the BPLR system. But there are some non-transparent aspects to the fixation of the base rate, which need to be highlighted.

In simple words the 'base rate' system recommends that the one year retail fixed deposit rate of a bank (after making certain adjustments) be the base rate for that bank and that floating rate loans be pegged with reference to such a base rate. The one year retail FD rate for each bank is easily and publicly available and to that much extent, it adds considerably to transparency.
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Friday, October 30, 2009

Credit policy may not impact home loans, say experts

The realty sector, especially in the home segment, has already witnessed some price rise and an interest rate revision, which in any case will be small, may actually help slowdown the spiraling price rise,' says a senior banker
The credit policy announced by Reserve Bank of India (RBI) governor Subba Rao on Tuesday may have hints of a tighter credit regime, but it may not have an impact on the interest rate structure for home loans, say experts.

Experts say that their opinion is based on two facts.

First, the demand for homes and home loans, in turn has gone up in the wake of the soft rate regime put in place by the finance minister early this year as part of his anti-recession measures.

Second, the Centre has already expressed concerns about the bankers' unwillingness to pass on the benefits of the revival package announced by the finance minister.

To read more, please, visit The Times of India

Due to sluggish real estate demand, DLF registers a 77 per cent drop in the net profit

The country’s top real estate player, DLF Ltd, registered a 77 per cent drop in its net profit during the quarter ended September, as demand for real estate continued to be sluggish compared to last year.

The company registered a profit of Rs 439.7 crore during the quarter, compared with Rs 1,934.1 crore during the comparable quarter last year, shows the consolidated results announced by the company today. Sales (and other receipts) during the quarter also dipped 53 per cent to Rs 1,751 crore.

Other real estate companies also saw similar dips in sales and profits. Housing Development & Infrastructure Ltd (HDIL) posted a 44 per cent dip in net profit to Rs 148.6 crore, while Sobha Developers’ net profit was down 38.2 per cent to Rs 27.5 crore during the quarter.

To read more, please, visit DLF net drops substantially on sluggish real estate demand

Saturday, October 24, 2009

NRIs, investing in Indian real estate market is simple!

A number of overseas representative offices set up by banks enable NRIs to seek home loans for investments in real estate in India. Even select foreign banks in the private sector provide home and mortgage loans to NRIs. Repayment should be made by way of inward remittance through normal banking channels or by debit to the NRE, FCNR (B) or NRO account, or out of rental income derived from renting out such property. In fact, repayment is treated as equivalent to foreign exchange received for purchase of residential property.

The rules governing NRI investments are provided in the Foreign Exchange Management Act (FEMA). The prohibited areas for investments continue to be agricultural land, plantation property or a farmhouse. An NRI can acquire any immovable property in India other than agricultural land, plantation property or a farmhouse. He can transfer any property in India to a person resident in India or an NRI resident outside India other than prohibited properties. For a person of Indian origin (PIO) the same regulations would apply.

There are no restrictions on the number of residential /commercial properties purchased in India but repatriation is restricted to two residential units after a lockin period of three years. Rental income is repatriable. Thus, a number of NRIs have shown interest in leased properties across the country.

Similarly, NRIs may transfer by way of gift, residential /commercial property in India to a person resident in India or to an NRI/PIO. The sale proceeds of residential /commercial property received by way of gift should be credited to a NRO account only. As regards repatriation, an amount not exceeding $1 million per calendar year is allowed subject to production of documentary evidence in support of inheritance and tax clearance certificate/no objection certificate from the income tax authority to authorised dealer for remittances.

The CBDT has recently notified that any gift-in-kind, being an immovable property or any other property, the value of which exceeds Rs 50,000 will become taxable in the hands of the donee, being an individual or a HUF, as income from other sources.

Tax benefits

Like residents, NRIs are allowed a deduction upto Rs 1.5 lakhs per annum in respect of interest payable besides deduction on the principal repayment within the overall ceiling of Rs 1 lakh. If there is loss under the head 'income from house property' which cannot be set-off against any income of the same year, it can be carried forward for the next eight assessment years to be set-off against any income from the house.

A house leased for a minimum period of 300 days in a calendar year is exempt from wealth tax. Investments in commercial property will enable the investor for exemption from wealth tax. Purchase through an agreement to sell with a power of attorney duly executed by the seller has been made possible. It need not be registered and no stamp duty is payable. The benefit of cost inflation index at 631 for the year 2009-10 for saving tax on long-term capital gains is available to NRIs as well.
The Economic Times

Thursday, October 1, 2009

Ireo launches Grand Arch in Gurgaon

"The Grand Arch marks the launch of the Ireo City -- the beginning of a new era in the Indian real estate sector with a planned launch of 10 million square feet area of its 3000 acres owned land in next twelve months across NCR, Haryana, Punjab, Tamil Nadu and Maharashtra," Lalit Goyal, vice chairman & managing director, Ireo.
Ireo, the leading FDI from a private equity fund dedicated to the Indian real estate sector and a fully integrated real estate development company, has announced the commencement of its first signature property - The Grand Arch -- in the Ireo City, Gurgaon. Ireo City is the first mega project of the company in North India, and the planned capital outlay for the development is Rs 10,000 crore.

Spread over 500 acres, Ireo City, the integrated township, will offer a unique mix of features such as an elevated walk way connecting the entire township, art centers, theatres etc. Ireo City development will also include schools, hospital, parks, luxury hotels, shopping malls, service apartments and office complexes.

The Grand Arch, spread over 20 acres, is designed to be Gurgaon’s new landmark residential complex.
To read more, please, visit The Economic Times