With residents opposing the demolition, the demolition teams of BMC may not be able to begin the actual demolition of the illegal floors today
Campa Cola Society in Worli area of Mumbai witnessed tense moments on Tuesday as over 100 families barricaded themselves and refused to move out of the compound. However, BrihanMumbai Municipal Corporation's (BMC), the civic body, initiated action to disconnect power, water and gas connections before going in for demolition of illegal floors as per the orders from the Supreme Court.
Kishore Kshirsagar, deputy commissioner, BMC told reporters that "Three teams of the BMC have entered the building to disconnect water, gas and electricity connections. The residents had given an affidavit that they will evict their flats by 11th November".
"Our officials will see whether they have vacated their flats and accordingly disconnect the water, gas and electricity connections," he said.
"The residents are opposing the demolition. We are trying to handle the situation peacefully and avoid using force," he said.
Several police personnel have been deployed at the spot to prevent any untoward incident, Kshirsagar said.
The demolition teams of the civic body have also reached the spot but the actual demolition of the illegal floors is unlikely to take place today, a civic official said.
Since the morning, the residents parked their vehicles near the gate, blocking access and said they would not allow civic staff to enter the premises.
The apex court had set the 11th November deadline to vacate 102 flats declared as illegal. Families living in the compound had pinned their hopes on Chief Minister Prithviraj Chavan stepping in and saving their homes by passing an ordinance to regularise their flats. However, the CM is reportedly does not want to go against the legal opinion of the advocate general.
The apartments in the Campa Cola Compound were constructed on land leased in 1955 to Pure Drinks Ltd. Pure Drinks was later allowed by the BMC in 1980 to build residential apartments. Seven high-rise buildings were constructed at the compound between 1981 and 1989 by developers Yusuf Patel, PSB Constructions and BK Gupta.
Illegal floors of Midtown Apartments, Esha Ekta Apartments, Shubh Apartments, Patel Apartments (two buildings, six floors each), BY Apartments and Orchid Apartments comprise 140 flats. While the builders were granted permission for ground-plus-five floors, Midtown has 20 floors, Orchid has 17, Esha Ekta has eight, Shubh has seven while BY and Patel have six floors each.
Nifty closed down for the 6th consecutive day thanks to a falling rupee and bond prices but is set for a short-term bounce.
Markets opened in the green on Tuesday after a sharp fall over the last five days but the optimism did not last long. The weakness could be felt from the opening as it began to slide within an hour. Around noon, the markets dipped into the red and briefly recovered but soon fell off and continued the downward journey till trading session ended. It closed at the low of the day, This is the 6th consecutive day that the market has closed down and a reaction rally is expected anytime now.
The S&P BSE Sensex and the NSE Nifty opened at 20,510 and 6,087, respectively. The Sensex moved up to the level of 20,584 before dropping off to 20,262, while the Nifty moved up to the level of 6,108 then dropped to as low as 6,011. The Sensex closed at 20,267 (down 209 points or 1.02%) while the Nifty closed at 6,011.80 (down 67 points or 1.10%).
The National Stock Exchange (NSE) recorded poor volumes on the decline at just 59.43 crore shares trading hands, marginally better than yesterday but still weak. Of the 1,228 shares on the NSE, 377 advanced, 803 fell while 48 remained unchanged, signifying broad weakness and lack of depth.
All sectoral indices were in the red except for FMCG and pharmaceuticals which were flat. PSU Banks fell nearly 2% while CNX Auto went down 1.50%.
Of the 50 stocks on the Nifty, just 10 scrips ended in the green, showing broad-based weakness. The top five gainers were Ranbaxy (1.51%); M&M (0.93%); ITC (0.93%); Cairn (0.60%) and Sun Pharmaceuticals (0.41%), while the top five losers were JP Associates (-4.88%), Tata Motors (4.27%), Axis Bank (3.38%), DLF (3.31%) and Tata Power (3.19%).
Arvind Mayaram, economic affairs secretary, has said that the finance ministry expects $25 billion of inflows by end of the year. In a measure to contain the rupee and deficit, the Reserve Bank of India (RBI) had received $17.5 billion through a special window for swapping foreign currency non-resident (bank) deposits and overseas foreign currency borrowings by banks.
Elsewhere, in the US, there is a continued outlook that the dollar will continue to strengthen on back of good economic data which has driven US yields higher. Gold prices have been a big casualty in global markets. Gold has already lost nearly a quarter of its value this year. Not only is the world glued on the next potential US Federal Reserve chief but also awaits China’s plans which will unveil China’s direction over the next decade.
Asian markets trended up led by Tokyo which shot up 2.20% to 14,588, thanks to a firmer dollar. Hang Seng remain in the red, down nearly 1%.
US stock futures was flat as talks of Dallas Federal Reserve President Richard Fisher talked of the possibility of tapering once again.
An independent distributor highlighted to us the conflicts of interest that could arise with the new SRO
The Securities and Exchange Board of India (SEBI) will soon appoint a self regulatory organisation (SRO) for mutual fund distributors. The market regulator will select one of three applicants for the job—Institute of Mutual Fund Intermediaries (IMFI), Organisation of Financial Distributors (OFD) and Financial Planning Standards Board (FPSB) India. IMFI has been set up by the Association of Mutual Funds in India (AMFI). The OFD was set up by Financial Intermediaries Association of India (FIAI), a grouping of 15 large distributors and FPSB is a financial planners’ industry body. Is there a conflict of interest between the promoters of these applicants and small distributors?
Chilukuri KRL Rao, a mutual fund distributor based in Hyderabad, says, “One thing that is common in all these applicants is, either they have a negligible representation for small distributors or independent financial analysts, or IFAs (who mainly serve small investors), or no representation at all.”
As Moneylife has pointed out in the past, in the top 15 cities IFAs contribute around one-fourth of the total fund inflows. From beyond 15 cities, IFAs’ contribute the highest share amounting to 55% of the total fund inflows. (Read: Mutual fund regulations: Who contributes the most to equity inflows is overlooked)
AMFI has been known to support big fund houses and large distributors. Last year, AMFI scrapped the plan to ban upfront commission. According to Rao, FIAI is a trade body of the biggest distributors in India who predominantly support upfront commissions and are known to be prone to churning, while FPSB India is in the business promoting certified financial planning (CFP) course. Though, improving knowledge will be a desirable objective for any financial professional, doing it forcibly may prove to be counter-productive, Rao fears.
“The lack of transparency in payment of commissions is the root cause of all the ills associated with the industry including upfront commissions,” says Rao. He is of the opinion that the semi-regulatory powers a fund house body gets through SRO may be leveraged to further the practice of upfront commissions to increase their profitability at the expense of small distributors or IFAs.
Upfront commission paid out by mutual fund houses to distributors has always been a bone of contention. Last year, industry body Association of Mutual Funds in India (AMFI) scrapped the plan to ban upfront commission. Trail commissions, though lower than the one-time upfront commission, support the business model of small distributors and IFAs as they establish long-term relationships with their clients. Big unscrupulous distributors, on the other hand, look to earn higher in the form of upfront commissions through excessive churning of their clients’ portfolio. This practice in not only damaging for the client but affects the industry as a whole. (Read: Why don’t funds promote trail commissions instead of upfront commissions?)
Would the new SRO make transparent the payout of upfront commissions or would it ban the payment of upfront commissions completely? AMFI promoted IMFI may not prove to be effective as AMFI itself has failed in the past to get the market regulator to ban upfront commissions. As pointed out by Rao, AMFI Code of Ethics (ACE) for Asset Management Companies says, ”Members and their key personnel, in the conduct of their business shall observe high standards of integrity and fairness in all dealings with investors, issuers, market intermediaries, other members and regulatory and other government authorities.” But, to this day, no fund house publishes on its website the basis of payment of commission or incentives to an intermediary. Thus, AMFI has proved to be ineffective in the past. OFD would most likely support the interest of large distributors, while FPSB would look to promote its CFP certification to distributors.