Housing for All scheme will fail without release of land

The Narendra Modi government's 'Housing for All' scheme will remain unrealised without massive efforts to unlock non-essential lands being held by state-run units, speeding up approvals and financial empowerment of the poor, US real estate services firm JLL's Indian arm said on June 23. 

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"This will require massive efforts to recognise and delineate the non-essential lands currently being held by large government bodies such as Indian Railways, ministry of public enterprises, port trusts and department of heavy industries," JLL India chairman Anuj Puri said in a statement here, indicating the need to build 20 million homes to achieve the scheme by 2022. 

"Unlocking such lands while speeding up the approval process and creating incentives for private sector participation are all needed as part of a large, coordinated effort if we are to realise the vision of Housing for All by 2022," he said. 

"To create housing for these urban poor, the only solution lies in the unlocking of land in the urban areas. The kind of housing supply that the government is targeting seems out of the question if appropriate lands are not made available," he added. 

Under the scheme, the government seeks to make the houses in urban areas, mainly to service the urban poor. 

"This scheme aims to provide the urban poor with the financial muscle to buy affordable houses. By providing an interest subvention/subsidy scheme, the government is allowing access to cheaper structured finance to such low-income categories," said JLL India. 

Puri also pointed out that though the scheme provides homes to slum-dwellers at no cost through a public-private partnership (PPP) slum rehabilitation project, it offers no concrete solutions for the urban poor not residing in a slum and who want to own a house in a metro city. 

"Though the loan amounts have been increased, his income levels may not qualify him for the loan disbursal amount that is high enough for him to buy a house in the current scenario, when housing prices are high," he said. 

Source - MUmbai mirror

SBI TO HOLD HUGE ONLINE PROPERTY AUCTION TO SELL REPOSSESSED FLATS

India's largest bank, the State Bank of India (SBI), will hold a record online auction this weekend to sell repossessed flats, warehouses and offices worth a total of nearly $200 million as the state lender seeks to chip away at its $10 billion mountain of bad debt. 

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The SBI auction will be the biggest nationwide online sale to date and is a rare public move to turn distressed loans into ready cash. 

It comes weeks ahead of rule changes that will force banks to take on much larger provisions for such loans, with what were previously labelled as restructured debts being reclassified in accounts as bad debt. 

Including both bad and restructured debt, more than a tenth of Indian bank loans have soured. India Ratings and Research, part of the Fitch agency, estimates impaired loans could hit 13 percent of the total by March next year. 

That has left debt-burdened banks scrambling for cash, even resorting to flash sales of repossessed properties that on their own can be worth as little as a few thousand dollars. 

"We are now a lot more aggressive," said Parveen Kumar Malhotra, a deputy managing director at SBI, who leads a special unit managing stressed assets. 

"We are in a better position to do all the things required, from (phone) calls to auctions and everything in between, including legal cases." 

UNDER PRESSURE 

India's state-owned banks have all have experienced a jump in bad loans over the past two years as borrowers, particularly companies, struggled to service loans when the economy slowed. 

With less cash from the government and new global prudential rules on the horizon, Indian banks are under increased pressure to clean up their balance sheets. 

SBI's sale pulls together more than 300 pieces of property from two dozen Indian cities in what its advertising described as a "mega e-auction" of prime commercial and residential properties, many of which were put up as collateral by fledgling entrepreneurs. 

Efforts by Indian banks to claw back bad debt have been complicated by the country's lack of a bankruptcy code. Reserve Bank of India data shows that, as of March last year, Indian lenders had received only 16 percent of the value of loans they had sought to recover through tribunals. 

SBI itself was involved in one of the most high-profile cases in recent years after the collapse of Kingfisher Airlines, which still owes banks $1.5 billion. Creditors, led by SBI, took possession of Kingfisher offices in Mumbai last month after trying for almost two years. 

Overseas, options for banks have included packaging the loans and selling them to other businesses that will seek to recover the cash. But such sales in India were badly hit after rules tripled the upfront payment for buyers of bad debt.

Source - Mumbai Mirror

AIR INDIA TO CUT COSTS BY $227 MILLION TO REDUCE LOSSES

State-owned carrier Air India is to cuts its costs by 14 billion rupees ($227 million), or about 6 per cent of its total outlays, in the next financial year after the government asked the loss-making airline to improve its finances. 

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Air India, which controls close to a fifth of India's domestic air travel market, has been losing money for years and has long been criticized for its high costs. In 2012, the government handed the company a $5.8 billion bailout package. 

The airline said in a statement late on Sunday that it would identify "surplus staff", freeze contractual hiring and discontinue flights which are not meeting fuel cost targets, to reduce its variable spending of 140 billion rupees by a tenth. 

Restrictions on staff travel and hospitality have also been introduced, Air India said. 

All but one of the major carriers in India are losing money because of high operating costs and some of the lowest fare prices in the world amid intense competition.

Source - Mumbai mirror