More housing finance companies to heat up home loan biz

MUMBAI: A sharp increase in the number of housing finance companies (HFCs) is set to intensify the competition in home loans. According to ratings agency ICRA, the overall market size for housing finance is around Rs 15.3 lakh crore as of September 2017 and the overall share of HFCs is Rs 8.5 lakh crore.

Home loan growth, which has been the main driver of increase in bank credit, slowed down from 19% in FY16 to 16% in FY17 and further to 15% Y-o-Y for the 12 months ended September 2017. The HFCs’ loan portfolio has grown at a faster pace than banks on the back of the increase in the number of players — from 57 in 2013 to 91 in December 2017.

Several new groups have entered the mortgage business through a dedicated housing finance company. These include Piramal, Religare, Reliance, Aditya Birla Housing, Edelweiss and IndoStar Home Finance. Currently, HDFC, SBI, ICICI Group, LICHF and Axis Bank dominate the home loan market. Going forward, the other finance companies are expected to increase their share.

While the cost of funds is higher for non-banks, they are able to manage their spreads by lending to developers. With non-housing loan portfolio of HFCs growing at a faster pace, the share of housing loans in the overall HFC portfolio has declined to 67%.

“From an overall retail credit perspective (across lending groups), retail credit growth of housing finance companies was largely range-bound at around 20% over the period September 2016 to September 2017, while bank and NBFCs witnessed some decline in their retail credit growth post-demonetisation. The recovery was relatively better for banks, as it grew at about 17% Y-o-Y in September 2017, driven by the non-housing segment. However, NBFC retail credit growth was relatively lower at about 15-16% during this period,” said A M Karthik, assistant VP and sector head (financial sector ratings), ICRA.

According to an ICRA report, NBFCs’ share in the unsecured consumer credit (excluding microfinance) is likely to expand as more entities venture into this segment for product diversification and higher business yields.

Source- ET Realty

Booking under-construction flat not a purchase, merits tax relief: ITAT

MUMBAI: A taxpayer who books an under-construction flat and acquires it within three years of the sale of his old house will be entitled to a tax deduction, the Mumbai bench of the Income-tax Appellate Tribunal (ITAT) has ruled.

“Booking of a flat in an apartment under construction must be viewed as a method of constructing residential tenements,” said the December 18 judgment.

This ruling is important as tax relief on long-term capital gains (LTCG) accrued from sale of a house can be availed only if it is invested in another house within a specified period.



Under section 54 of the I-T Act, the period prescribed for investing the LTCGs in a new house is two years from the date of sale of the old house. The tax benefit is also available if a new residential house is constructed by the taxpayer within three years from the date of sale of the old house.

In this case, the taxpayer invested LTCGs of Rs 78.4 lakh arising from the sale of his share of a Byculla flat into booking a flat in an under-construction building at Mumbai Central. He paid the builder Rs 1.04 crore in instalments prior and post the sale of the old flat.

The final payments were made subsequent to the sale of the old flat. Since the payments exceeded the amount of LTCGs, the taxpayer claimed the entire sum of Rs 78.4 lakh was deductible under section 54. In other words, the taxable component of the LTCGs was ‘nil’.

Since the old flat was sold on December 5, 2012, the taxpayer submitted that the time limit prescribed under section 54 (for constructing a residential house) was available up to December 2015. He pointed out that the new flat was acquired before this date. But the tax authorities treated the booking of a flat as a purchase, which is subject to a two-year limit.

Following earlier decisions of the Bombay high court and the tribunal itself, the ITAT agreed that booking of a new flat in an under-construction apartment should be considered as a case of “construction” and not “purchase”. The ITAT added that the construction can commence prior to the date of sale of the old asset. Earlier, judicial decisions of the Karnataka high court and Ahmedabad ITAT have also held that the date of commencement of the construction is not relevant, and it is only the completion of construction which is relevant for the purpose of section 54.

In this case, the taxpayer had booked the new flat much before the sale of the old flat. However, there was no dispute that he took possession of the new flat within three years of the sale of his old residential flat. Thus, the ITAT held that the time limit prescribed under section 54 had been met.

Lastly, regarding the payments made before the sale of the old flat, the ITAT observed that there is no requirement that the proceeds realised from the sale of the old house alone should be utilized. Thus, the deduction claimed by the taxpayer was allowed in full.

What ITAT said

The ITAT ruled that booking of an under-construction flat is a case of construction and not purchase

Its construction can start before the date of sale of earlier property, but it should be completed within three years from that date to be eligible for tax relief

Source- ET Realty

RERA's administration under Urban Affairs Ministry's domain

The matters related to the administration of the RERA for regulation of the real estate sector and to protect the interest of consumers will be dealt by the Housing and Urban Affairs Ministry, an official order said.

The central government has amended the Government of India (Allocation of Business) Rules 1961, in this regard.

The work of the Real Estate (Regulation and Development) Act, 2016, which mandates the establishment of the Real Estate Regulatory Authority (RERA), will be looked after by the Urban Affairs Ministry, the order issued by the Cabinet Secretariat said.

The RERA is for regulation and promotion of the real estate sector and to ensure sale of plot, apartment or building in an efficient and transparent manner and to protect the interest of consumers in the real estate sector.

The law also has provisions for the establishment of an adjudicating mechanism for speedy dispute redressal related to the real estate sector.

The administration of the Street Vendors (Protection of Livelihood and Regulation of Street Vending) Act, 2014, will also be done by the same ministry.

The Act is to protect the rights of urban street vendors and to regulate street vending activities.

In another order, the development, operation and maintenance of the National Public Procurement Portal Government e-Marketplace has been brought under the commerce ministry.

The government had last year launched an e-market platform for public procurement of goods and services.

The online platform followed the Centre's decision to close the Directorate General of Supplies and Disposals (DGS&D), the procurement arm of the Centre.

Source- ET Realty

SIKKA GROUP ORGANISES BLANKET DISTRIBUTION CAMP

With the motive to help underprivileged people against cold weather, a huge blanket distribution camp was organised at Sikka Kaamna Greens, Sector-143, Noida. The distribution camp was organised by Sikka Group, a realty major, which has developed many residential & commercial projects. More than 1000 blankets were distributed by the real estate company amongst construction workers, security guards and poor from the nearby areas.

Every year thousands of people die because of cold waves in Northern parts of India during winters. Such free camps help hundreds of people in saving their lives during winters. These camps are organised with a motive to help the underprivileged who otherwise are unable to buy warm clothes or blankets from markets.


 “There are hundreds of workers working at our sites who cannot afford to take necessary measures to prevent themselves from chilling winters. Thus, we planned this activity to help them fight against cold. Initiatives like these give us immense pleasure and satisfaction that we were able to spread love and warmth to people who otherwise are left ignored.
Also, the activity gave us an opportunity to create awareness amongst our buyers, who also participated with us, to help others who might be in need and are not privileged enough. Previously too, we have been conducting such activities at many of our sites” said Piyush Sharma, Senior Vice President, Sikka Group.

Govt to announce final 10 smart cities' names by Jan-end

NEW DELHI: The Centre will announce the next set of 10 cities for funding under the Smart City Mission by January-end, a top official said today.

The Housing and Urban Affairs Ministry has till now announced the names of 90 cities under the scheme and each city will get Rs 500 crore as central assistance for implementing projects.

The government aims to develop 100 smart cities under the scheme.

"The process is on. We have received the proposals from the cities. Next 10 cities will be announced by January-end next year," Housing and Urban Affairs Secretary D S Mishra told reporters on the sidelines of an event here.

The ministry has received proposals from 15 cities for the fifth and the final round of the mission, while five cities have not submitted their plans, an official said.

Some of the cities that have sent their proposals include Itanagar (Arunachal Pradesh), Biharsharif (Bihar), Amravati (Maharashtra), Erode and Dindigal (Tamil Nadu), and Uttar Pradesh's Moradabad, Meerut, Saharanpur, Bareilly, Rampur, Rae Bareli and Ghaziabad, the official said.

Silvasa (Dadra and Nagar Haveli), Kavarati (Lakshdweep) and Diu (Daman and Diu) have also sent their proposals.

The official said that Bidhannagar, Durgapur and Haldia in West Bengal, Shillong in Meghalaya and Greater Mumbai in Maharashtra have not submitted their proposals under the scheme.

The West Bengal government has already announced that it would not participate in the Centre's Smart City programme.

Source- ET Realty

IGI Airport to get closer as Gurgaon authority picks Dwarka route for Metro line extension

The Gurugram Metropolitan Development Authority (GMDA) has formally proposed that the new metro extension line will connect Huda City Centre station with Sector 21 Dwarka.

The decision comes almost two months after GMDA was given the task of gathering public feedback on two new metro route options for the city. On Tuesday, GMDA compiled its report and recommended the Dwarka route for an extension to the Haryana Mass Rapid Transport Corporation (HMRTC). In its feasibility report submitted to the Haryana government in October, the Delhi Metro Rail Corporation (DMRC) had suggested two options — a longer route connecting Huda City Centre to Dwarka Sector 21 and a shorter one connecting Huda City Centre to the Gurgaon Railway Station.

The public feedback collected over 15 days indicated that Gurgaon residents prefer a metro route between Huda City Centre to Dwarka Sector 21. According to the GMDA, the consultants for the Metro project, over 400 ‘substantive’ comments were received.

The 27.5-km route from Huda City Centre towards Dwarka Sector 21 covers Subhash Chowk on Sohna Road, Hero Honda Chowk, sectors 10A,10,9,9A, ESI Hospital, the chowk of Sector 4 and 5 (including the railway station and adjoining area), Sector 23, Chauma rail crossing and Bijwasan border. In its report, the GMDA has suggested a ‘marginal’ change to the DMRC’s proposed route to HMRTC.

“In GMDA’s report to HMRTC, a marginal change in the metro route has been suggested for consideration. However, the decision on it rests solely with the HMRTC,” V Umashankar, additional chief executive officer, GMDA, said.

Umashankar did not divulge the details of the change.

However, sources revealed that a small stretch of the route between Chauma railway crossing in Sector 111 and Bijwasan border falls within the jurisdiction of the Northern Railways.

GMDA officials suggested tweaking the route from Sector 23 towards Palam-Bijwasan road and subsequently towards Dwarka.

GMDA officials explained that the alteration will allow them to complete right over the Metro route within Gurgaon and implement the project in lesser time, as requisite permission from the railways may take time and prove to be a hurdle to the project.

For residents, who favour the route from Huda City Centre to Dwarka Sector 21, the connectivity to places on the right of the Gurgaon Expressway and connectivity to DMRC’s blue line and airport express line towards Noida and New Delhi railway stations at the Dwarka Sector 21 interchange, is an added bonus.

Source- Hindustan Times

RBI set to hold rates citing inflation, growth revival

MUMBAI: The Monetary Policy Committee (MPC) will likely vote to keep interest rates unchanged later this week citing inflationary pressure and a recovery in economic growth, according to an ET Poll conducted among 20 market participants.

In RBI’s bi-monthly policy announcement due on December 6, the MPC may also warn of rising prices and adopt a more hawkish tone, which could well be a prelude to a change in stance to tightening from neutral, said a majority of respondents. The MPC will meet on Tuesday and Wednesday.

“Growth concerns are likely to somewhat recede in the coming quarters as the positive impact of reform measures like GST (goods and services tax) will creep in,” said Shubhada Rao, chief economist at Yes Bank. With inflation and fiscal deficit remaining as risks, these factors collectively make a case for status quo while the markets look for the central bank’s assessment in the policy statement. “Room for rate cut is getting squeezed,” she said.



Retail Inflation may go up
India’s gross domestic product expanded 6.3% in the July-September quarter from a year earlier, reversing five quarters of slowing growth and up from a three-year low of 5.7% in the preceding quarter. That comes after disruptions caused by demonetisation in November last year and GST’s rollout on July 1.

“India’s growth is below trend, temporarily disrupted by big-ticket reforms and a weak capex cycle,” said DBS Bank economist Radhika Rao. “The resultant negative output gap has helped contain price pressures, but this is likely to reverse if growth sets into motion next year, as businesses adjust to the new tax regime, (and) the deleveraging process hastens due to bank recap plans. Also, demand recovers, pulling up manufacturing activity alongside.”

Manufacturing activity expanded at its fastest pace in 13 months in November. The Nikkei Indian Manufacturing Purchasing Managers’ Index rose to 52.6 in November compared with 50.3 a month earlier.

“The domestic and global factors which may trigger a rise in inflation might prompt a hawkish response from the MPC, thereby signalling a change in the interest rate cycle,” said Saugata Bhattacharya, chief economist at Axis Bank. “MPC’s communication will be critical in this transition. More than rates, this review will be more about liquidity and transmission. Government’s reform measures are raising India’s potential output.”

The Consumer Price Index (CPI), the retail gauge for inflation, hit a seven-month high, led largely by higher vegetable and fuel prices.

It rose 3.58% in October over the same month last year. It may increase as much as 4.5% by March this fiscal year.

The MPC has maintained a neutral monetary policy stance with the objective of achieving the medium-term CPI target of 4% within a band of 2 percentage points on either side. State Bank of India, the country’s biggest lender, last week raised interest rates by about 100 basis points on bulk deposits.

Since the beginning of October, the benchmark bond yield has risen by about 42 basis points to 7.06%. A basis point is one-hundredth of a percentage point.

Earlier in August, the MPC cut its key policy rate by 25 basis points to 6%, the lowest since November 2010. “RBI’s current neutral stance has an option for rate increase, but nothing would happen immediately, be it change of stance or something else,” said Abheek Barua, chief economist at HDFC Bank. “An extended pause is expected in RBI’s policy action with the central bank anchoring the inflation cautiously.”


Source- ET Realty