Companies & Sectors
Real Estate Bill could encourage FDI inflows: Nomura
The Bill could go a long way towards protecting interests of home buyers by facilitating more timely completion of projects and ensuring greater transparency, says the research note
 
The Real Estate Bill can bring greater credibility to the sector through more transparency as well as accountability and could encourage flow of foreign direct investment (FDI) funds into the market, says Nomura in a research note.
 
On 10th March, the Rajya Sabha passed the Real Estate (Regulation and Development) Bill, 2016, aimed at protecting the interests of home buyers, bringing in more transparency and accountability into the real-estate sector.
 
According to the financial services firm, the Bill could go a long way towards protecting interests of home buyers by facilitating more timely completion of projects and ensuring greater transparency.
 
This Bill was touted as a major reform measure to regulate the vast real estate sector and bring order in it.
 
“Mandatory disclosures and registration may reduce black money transactions in this sector; and greater credibility of the real-estate sector (through greater transparency and accountability) could encourage flow of FDI funds into the sector,” Nomura said in the note.
 
“The Bill is yet to be passed in the Lower House, though that should be easier, as the government has an absolute majority in the Lower House,” Nomura added.
 
The key features of the bill include, timely execution, accountability and transparency.
 
The Bill proposes setting up state-level real-estate regulatory authorities, where builders will be mandated to register all projects above 500 sq mts (earlier 4000). This would apply to both residential and commercial real estate projects, including those currently under construction.
 
State-level appellate tribunals will be set up for addressing complaints. A timeline of a maximum 60 days has been set for resolution of disputes.
 
Failure to register a project could result in imprisonment of up to three years for developers or 10% of the project cost or both.
 
Home buyers and real-estate agents could also face up to one year of imprisonment, if found in any violation of the tribunals or regulatory authority.

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Rajat Gupta released from prison
Gupta was released on Friday, four years after he lost his insider trading trial and suffered multiple legal setbacks to overturn his conviction
 
Goldman Sachs' former Director Rajat Gupta has been released after completing his two-year prison term, weeks after a US court agreed to re-hear his appeal to throw out his 2012 insider-trading conviction.
 
According to his record at the Federal Bureau of Prisons, India born Gupta was released on 11th March. Gupta’s prison term was to end on 13th March, but since the date fell on a Sunday, he was released on Friday, four years after he lost his insider trading trial and suffered multiple legal setbacks to overturn his conviction.
 
The Harvard-educated was convicted in his 2012 trial of passing confidential boardroom information to his one-time friend and business associate Raj Rajaratnam. 

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Wilful Defaulters are a result of Wilful Blindness
How many organisations turned a blind eye to Vijay Mallya's bad loans
 
It is no surprise that the self-crowned King of Good Times, Vijay Mallya, still does not get it. “Why am I being made the poster boy for bad loans of banks?” he asks peevishly. Well, because you were immature enough to flaunt your enormous wealth in the faces of India’s poor and your own unpaid employees of Kingfisher Airlines (KA), without any concern for their distress. While you tweeted about Formula 1 and the IPL, you had no word of sympathy for their struggles—not even when the wife of one employee committed suicide! And while you strut around the world and host obscene birthday parties, KA employees, who earned a relative pittance, were listed as ‘defaulters’ by credit information companies for failing to pay their EMIs (equated monthly instalments) on their precious loans. Many will remain defaulters and be forced to borrow from expensive private sources to keep their homes. You also allowed KA to default on crediting provident fund and tax deducted at source (TDS) to the government. This offence alone should have led to your arrest a couple of years ago, if our otherwise draconian investigation agencies were not specifically soft on you. 
 
It is, indeed, true that Vijay Mallya’s bad loans of over Rs7,000 crore are just one big blob in the enormous mass of bad loans—estimated at over Rs8 lakh crore—mostly extended to India’s richest and most privileged people. On 9th March, on discovering that Mr Mallya had fled the country, the Supreme Court of India (SC) issued him a notice seeking a reply in two weeks. His response will probably dictate what happens next; but his skilful manipulation of judicial processes may have finally come to an end. Let us not forget that Mr Mallya was in a big financial mess even in 1990-91; he dug himself out of that hole, thanks to his vast realty assets (including those from new acquisitions) while his liquor business boomed post-liberalisation. 
 
After that experience, Mr Mallya got himself power and near-immunity through a Rajya Sabha seat. He also learnt to manipulate the legal system to his benefit by filing cases in courts and tribunals across India. In May 2012, tax expert Vinod Kothari wrote in Moneylife about a case where commission was paid to one of Mr Mallya’s former wives claiming that she helped the business as a socialite; it was disallowed by the Chandigarh tax tribunal. In another case, money was siphoned from Punjab Breweries, through payment to a clearing and forwarding company which passed on the money as an interest-free personal loan to Vijay Mallya and his wife Samira Mallya (ITA 217 of 2002). 
 
He also won a legal battle to pay himself a guarantee fee of over Rs50 crore for giving a personal guarantee for the loans of Kingfisher Airlines (UB Holdings provided another guarantee of over Rs1,600 crore). Why was this guarantee not ruthlessly invoked? Why has the Securities and Exchange Board of India (SEBI) failed to question KA’s board of directors for pathetic oversight and governance? Is it because it comprised a Union secretary, an ex-chief of a public sector company and SEBI’s own former chairman? 
 
A simple look at Mr Mallya’s bad loan composition screams of crony capitalism. Every large lender is a public sector bank (PSB) starting with State Bank of India (Rs1,600 crore), which is the biggest, IDBI Bank, which controversially lent him over Rs900 crore even after Kingfisher had shut down, and 10 others. There are only two private banks with relatively smaller exposure. 
 
Apart from banks and tax authorities, even the Election Commission of India failed to act on repeated letters from former Union secretary EAS Sarma about Mr Mallya’s false election affidavit. Mr Sarma says that Mr Mallya did not disclose his offshore accounts and vast properties abroad which are routinely written about in the media. This, too, is an offence punishable under the Indian Penal Code and would have ensured that Mr Mallya did not exploit his legislative privilege for access and arm-twisting lenders. 
 
Now that the matter is before a Supreme Court bench, which seems genuinely disturbed at the loot of public funds, Mr Mallya’s manipulations will, hopefully, end and the SC will also be tough on the bankers who are projecting themselves as innocent victims. Making an example of Mr Mallya, and the bankers who bailed him out, will hopefully make other wilful defaulters see the writing on the wall and trigger real change. 

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COMMENTS

Balaji

1 year ago

Good article, though brief. Is it fair to say, all scams (including Harshad M.) are Banking scams? Where is RBI and SEBI?

Thanks.

S SRINIVASA RAJAN

1 year ago

One of the largest defaulters to Indian Banks is Zoom Developers where banks do not seem to hold any security at all. Yesterday I was viewing a TV program in NDTV where a former CMD of PNB (with highest exposure to the Group) who later on became the Deputy Governor of RBI confessed that his officials had flown abroad at the expense of the borrower and enjoyed the client hospitality but did not inspect any of the projects which they were supposed to be funding. A courageous confession but the question is why no action was taken against these officials. Also the TV report highlighted cases where there were 17 companies registered under a single address (a small room) and PNB officials very liberally granted loans to these companies with apparently no security. PSU banks have been systematically raped by politicians, bureaucrats in the Finance Ministry and bank officials and very few people have ever been convicted for a bank fraud in India. Perhaps it is high time for the Government to institute Fast Track Courts to deal with bank frauds.

SuchindranathAiyerS

1 year ago

The Wilful Blindness that caused an ice berg of which one tip is Kingfisher. But, is it willful blindness or deliberate expropriation of public wealth by those in power? India's notorious Kleptocracy:

At Rs 4 lakh crore, bad loans exceed market value of PSU banks.
It started with the Nagarwala case. During the Emergency,Sanjay Gandhi and Yashpal Kapoor used to drive away truck loads of damaged currency marked for destruction by RBI at Nagpur for recycling among their foot soldiers (The Indira Brigade of thugs and worse. "Secular Moslems"?). Comrade Pranab Da Mukherjee Ji was reputed to demand small velvet bags of diamonds for appointing Chairmen of Public Sector Banks. Corruption and crime were institutionalized by Indira Gandhi after she lost the Keshavananada Bharathi Case. The Indira "high command" was created to collect and maintain files of criminal wrong doing of judges, bureaucrats, military officers, police and others who would then be jockeyed into key positions and preferred promotions as they could be controlled and manipulated to implement PANGOLIN policy. Being a criminal was a sine qua non of Government Service under the PANGOLINs. I was there as an SBI Manager at Bellary when Janardhan Poojari's thugs kidnapped and raped the daughter of a Canara Bank Manager because he refused to entertain non Bankable proposals recommended by Khangressis.

SuchindranathAiyerS

1 year ago

While this is a typical legerdemain of Indian Crony capitalism, one must not forget the Ice Berg that sank the Titanic. Kingfisher was addressing a specific market segment. The Business Traveller who was sick of the insouciance of India's public sector carrier and different from the other private Indian operators who were addressing the low cost market. Kingfisher was doing quite well until it hit the turbulence created by Sonia Gandhi's Sharad Pawar's Praful Patel (Yes, the same member of Manmohan's "Coalition Dharma" aka "parivar-that-loots-together-to-stay-together who bought Honest Antony's wife's paintings for Air India).
Patel bought an enormous number of Boeing aircraft that nobody wanted and Air India's plans and estimates did not warrant for Air India that drowned the Indian Air Passenger market with excess capacity sinking Kingfisher. Air India would have drowned too. But, because it is a Public Sector, it has been kept flying at the cost of India's growing deficit, inflation and other tax payments. Praful Patel then went on to sell Air India's newly acquired Aircraft at far below cost to Etihaad Airlines. He also sold several of Air India's prized and high potential routes and landing rights. The people of India have and are paying far more for the Air India black hole that Sonia's Pawar's Patel made than The King Fisher debt which is merely a part of the whole.
It would be good when superficial Journalists, Bankers, Central Bankers and Politicians refer to Vijay Mallya's Kingfisher, they also refer to the Senior and bigger of the Siamese Twins that has drained the Public coffers. Praful Patel's Air India. (I wonder whether Pawar's Baramati and Mallya had a spat over booze leading to the enormous bill presented to Indian Citizens by Praful Patel ?). As a former Banker, I find the idea of accepting a "Brand" as collateral astounding and I doubt whether even the Crony Capitalist Junk Bond Bankers of the US and UK would be so daring. At whose behest did SBI do so? Chidambaram's?

REPLY

Sucheta Dalal

In Reply to SuchindranathAiyerS 1 year ago

As a regular reader of Moneylife, you have surely seen articles on numerous willful defaulters -- including AIR INDIA and Praful PATEL. If you have forgotten pick a name and google the Moneylife website. Request you to follow this practice before talking about "superficial journalists".
Meanwhile, even as a reader, you are a citizen of India. How about you sharing your efforts to stop corrurption in India?
thank you
Sucheta

shanti Patel

1 year ago

Our investing agencies and banks are working like KOOBHKARNA-sleeping until the last stage.
After the HORSE left the country, all the agencies started investigation-C.B.I.,ED,Economic Offence Wing and SFIO. Where were they for so long?
Bank officials are equally responsible for their inaction till Mr.Mallya left the country.
All government officers including bank officers must be made accountable in such cases.
In cases of remaining big defaulters, the strict action is required and they should be prevented from leaving country.

Shanti Patel
Hon.Secretry-Bombay Shareholders Association

deepak narang

1 year ago

The regulator who stated that licence of KFA will be cancelled for violations of rules was sacked and Banker who took cudgles against him is suffering because of unconstitutional act of those in power .Why not fix accountability of those who punished honest officers

Mahesh S Bhatt

1 year ago

These many Law Ministers couldnot see this coming.

So wake up Correct Clean the mess.

Mahesh

Mahesh S Bhatt

1 year ago

KING OF GOOD TIMES
IS TASTE N TOAST OF INDIA

WELCOME TO GREAT DEMOCARZY WHERE CEC DOENOT REFORM
LAW MINISTERS TILL DATE HAVE GREAT LAWS OF NO PISSING AND SHITTING.

BUT NOW SHIT IS IN RAJYA SABHA HOW HIGH NEEDS TO GO SEE THE LIST BELOW

B. R. Ambedkarg
Jawaharlal Nehru
Charu Chandra BiswaS
Ashoke Kumar Sen
Lal Bahadur Shastri
Gopal Swarup Pathak
Shanti Bhushan
Hans Raj Khanna
P. Shiv Shankar
Jagannath Kaushal
Ashoke Kumar Sen
P. Shiv Shankar
Dinesh Goswami
P. Singh
Subramanian Swamy
Kotla Vijaya Bhaskara Reddy
Ram Jethmalani
Ramakant Khalap
Thambidurai
Ram Jethmalani
Arun Jaitley
Jana Krishnamurthy
H. R. Bhardwaj
Veerappa Moily
Salman Khurshid
Ashwani Kumar
Kapil Sibal
Ravi Shankar Prasad
D. V. Sadananda Gowda ALL MESSED UP

Merchant M S

1 year ago

When an ordinary citizen fails to pay his monthly instalments his car or house is auctioned. Why big industrialist of Lanco Group, Jaypee Group, GMR Group, Videocon Group, GVK Group, Essar Group, Adani Group, Reliance Group, JSW Group and Vedanta Group has not been asked to repay the loans. Why their properties are not auctioned. The PSB balance sheet will write off the bad loans and may be the FM shall make a provision in the next budget to help the PSB.

Suketu Shah

1 year ago

Mallya default is such a high profile matter esp when NPA defaults is on such top priority of Modi Govt(atleast as per press reports) that if they cannot make him pay up,no one else wl pay and public sector banks(already in deep trouble) wl stagnate at the very best,if not worsen.

Next few weeks shd be interesting what happens on this matter by NaMo govt.

Ajay Kumar De

1 year ago

I have personal knowledge with vulnerable documents that I handed over also to the second last FM in UPA regime showing desperate involvement of very many senior officials of RBI itself - not in Kolkata Region but also in Central Office up to the rank of their ED in the Himalayan multi crore scam in a cooperative bank in heart o city Howrah [WB. This is enough motivation for other institutions to show apathy and feign blindness. I repeat - not blindness but considerations are the reason. Rajan Sahab also has enough knowledge how his men from level of a babu, manager to the highest level are involved in the scam of Ramkrishnapur Cooperative Bank in Howrah

manoharlalsharma

1 year ago

Wilful Defaulters are a result of Wilful Blindness u may be failed to understand exactly if it termed GOODWILL sacrificed to POLITICAL funding and done with full knowledge as police is knowingly shielding crimes done by politicians.

TIHARwale

1 year ago

Vijay Mallya need to be made resident of TIHAR for default of KFA on crediting provident fund and tax deducted at source (TDS) to the government. What is preventing Feku56 from getting executives arrested immediately who are involved in approving after KFA had stopped flying. once this is one these executives will come out with more chacters involvedin this and other dbious deals but this is unlikely to happen recall Saradha Chit Fund scam where top TMC leaders are involved but Feku56 and Arun going slow and using it milk Mamata the patron saint and so it is no surprise if Vijaya Mallya was helped by rulers of the day to fly out of India

D S Ranga Rao

1 year ago

Vijay Mallya or Nirmal Singh Bhangoo of the PACL loot, the story is the same. Lack of governance. Neither of the loots did not happen overnight. They took their own time and over the successive governments and establishments. And mind you, they did not happen by stealth or secretly, but openly, publicly and nakedly. Also, the loot and plunder took place at many places and many times with the express consent and connivance of the looted. Most unfortunately, the government seems to be nowhere in the sight either to recover the loot or to fix up the responsibility and punish the guilty or to prevent recurrence of such an open loot in future.

PPM

1 year ago

India can recover 20% of the bank NPA from the bank officials as they got minimum 20% of the loan as commission for approving the large loans without proper collateral.

- Can the bank officials declare their assets and sources of their income to the public?

In the case of Vijay Mallya, the banks were waiting for him to leave the country to file the case to stop him leaving India. All the top officials of the bank are to take responsibility of this lapse.

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