In your interest.
Online Personal Finance Magazine
No beating about the bush.
Skywalks, or foot over-bridges, are an effort to give pedestrians much-needed space to walk as more and more footpaths were disappearing across the city. This phenomenon, coupled with the paucity of subways, necessitated the construction of these skywalks
Agitated over the construction of skywalks across the Mumbai Metropolitan Region (MMR), an activist had filed a public interest litigation (PIL) in the Bombay High Court against authorities like the Maharashtra State Road Development Corp Ltd (MSRDC), Mumbai Metropolitan Regional Development Authority (MMRDA), Maharashtra Government and the Brihanmumbai Municipal Corporation (BMC).
MMRDA, which has planned 50 skywalks, or foot over-bridges, is keen on adding more to the number. It has allocated Rs6 billion for the skywalk project and there are proposals to have shopping plazas on some of the walkways as well.
According to the PIL, there is no justification for increase in the cost of construction of skywalks especially when the price of steel has gone down from about Rs48,000-Rs52,000 per tonne to Rs24,000-Rs 22,000 per tonne. The authorities have also reduced the width of the skywalks as no shops or hawkers are to be permitted on these constructions.
The design of skywalks may have to be revised as the width of the skywalks is to be reduced on account of no hawkers and shops being permitted thereon, but no fresh tenders have been invited for construction of such skywalks by the authorities. If such tenders are invited, then construction would be done at marginally lower costs, the PIL said.
In the absence of detailed guidelines, the proposal for construction of skywalks in different areas is entirely as per the wishes of the concerned authorities and local representatives, the PIL claimed. It said that, often, after visiting the site, the local representatives have merely made an oral request over the telephone to the authorities about their desire to construct the skywalk in a particular area.
The activists are seeking to stop or stay further construction of skywalks in the MMR without amending the sanctioned development plan prescribed under the MRTP Act, till the final hearing of their litigation.
Skywalks are an effort to give the pedestrian much-needed space to walk as more and more footpaths were disappearing and there are very few subways available. Especially on the roads that lead to various suburban railway stations, these proposed skywalks would have given pedestrians much-needed freedom from roadside hawkers and the incessant honking of bumper-to-bumper traffic in congested areas. But these structures had become controversial following allegation of large-scale corruption in their construction. Even Vasant Davkhar, then deputy chairperson of the Maharashtra Legislative Council, had made serious allegations in June 2009.
Although the government promised an investigation, there is still no update on the same.
In July, Moneylife had written about the sky-high cost of these skywalks. See http://suchetadalal.com/?id=17d7467e-5407-14fa-4a5453e09771&base=sections&f&t=Mumbai%3A+The+Great+Skywalk+Rip-off
Aiming to enhance the distribution network for mutual funds, SEBI has allowed mutual fund schemes to be routed through stock exchange brokers. Are brokers equipped to handle an entirely different business?
Market watchdog Securities and Exchange Board of India (SEBI) has enlisted the services of stock exchange brokers for dealing in mutual fund units. SEBI plans to use the existing infrastructure in stock exchanges for facilitating investors to buy and sell units in a mutual fund. Over two lakh exchange terminals are to be used for facilitating transactions in mutual fund schemes, providing a reach to over 1,500 towns and cities. Notwithstanding infrastructure advantages over current distributors, it remains to be seen how brokers actually go about dealing in mutual fund units. Chandrashekhar Layane, senior VP, Fairwealth Securities said that a separate order routing mechanism would be developed for the same in the existing broker terminal. Existing mutual fund holders who are not having demat accounts would need to open demat accounts to allow smooth transactions through the broker terminal.
The fact is, mutual funds represent a broadly different line of business altogether. Brokers’ expertise lies in dealing with equity instruments and for them, switching over to the complexities of mutual fund schemes will involve a huge learning curve. Said Jagannathan Thunuguntla, equity head, SMC Capitals, “The various qualification exams can help brokers to gain knowledge. However, to make them completely conversant with the nuances of the mutual fund products can take some time. Over a period of time, the brokers can gain the relevant expertise and knowledge. However, the large brokers who have the in-house research arms, databases and the network can have an edge in terms of the research.”
While fund investors will benefit from the convenience of getting access to their neighbourhood broker, clarity is yet awaited on the costs involved for transacting through brokers. Presently, distributors are required to charge commissions directly from investors through negotiation, after SEBI banned funds from levying entry loads or initial fees for participation in their schemes. This has deprived distributors of large commissions and they have lost their incentive to sell mutual funds. Brokers’ charges for transacting in mutual funds would be same as that for equities. This means commissions could range somewhere between 0.25%-0.50% per transaction. However, it is not clear how additional costs such as securities transaction tax and stamp duty would be levied. Mr Layane confirmed, “The commission structure will be roughly equal to a delivery-based brokerage i.e., from 0.25 to 0.50 of the transaction value. Roughly it will be less than the existing entry load—around 1.25% charged by MF houses, which has been abolished by SEBI recently. But still some things will be unclear, like what will be the commission charges for SIP units.” Mr Thunuguntla said, “The commissions that brokers are going to charge will evolve over a period of time, once this new system gets operational and once all the market participants become familiar with this.”
Further, brokers would be wary of the poor volumes that mutual funds normally attract, especially from retail investors. For brokers, trading in equities is a bigger game, where the volumes are far better and hence the total commissions are also larger. Mr Thunuguntla added, “The volumes are better in equities. However, selling mutual funds can give brokers one more revenue stream and over a period of time, even the volumes in mutual funds can pick up.”
–Sanket Dhanorkar with Ravi Samalad [email protected]
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