Developers
in Mumbai can build more if
they set aside some space for publi0063 parking. The Maharashtra government
has come out with an incentive floor space index (FSI) provision that encourages developers and housing societies
to earmark space for a public cause in
return of permission to
build more.
This would not only
free up some privately-ownedplots or surplus space in
housing societies for public parking but
also have some impact on the property
market since the developers
will get extra FSI to build more.
In areas where the FSI has been caped at 1 or 1.33, this provision would virtually be a windfall for developers if they can set aside the required space for public parking. Additional FSI is big enough an incentive for developers. In the island city, the maximum permissible FSI, which determines vertical growth of a building in proportion with
the plot area will be 4 under the new parking policy proposed by the Government. In suburbsand extended suburbs, the maximum
permissible FSI will be 3, according to an
amendment made by the state to the section 37(2) of Development Control Rules (DC Rules). The general FSI in the island cityand suburbs is 1.00 and 1.33.
The provision says the minimum area of a plot being offered for
public parking should be 1000 sq m in the island city and 2000 sq m in suburbs. The minimum number of motor vehicles publicparking space should
not be less than 50 subject
to minimum parking space of 700 sq m. The maximum permissible FSI that the
policy offers is inclusive
of the FSI actually used by the developers or
societies. The
policy will be implemented by the Brihan Mumbai Municipal
Corporation (BMC).
The provision will work like this. Suppose
a developer or housing society offers a 20,000
sqm plot for public parking,
after that building or society has fulfilled parking requirements of the residents, to the municipal corporation and if the corporation accepts the proposal, the developer or the society concerned will get an additional FSI (depending upon location) over and above
the FSI granted earlier. People
using the parking space will have to pay charges to the
BMC. But the developer or society will not claim
any share in this revenue and
the only incentive
will be extra FSI.
The provision
makes a distinction
for areas near
railway stations, bus depots, metro stations, water
jetties, government
offices, and
prominent places of worship. If the parking space proposed bydevelopers or societies is within 500m distance
from any of these places, the
permissible additional
FSI will be
available on 50% of the built of parking area. In other parts of the city and
suburbs, this will be 40%. This provision has
been included to facilitate public parking around prominent places of worship
like Siddhivinayak, Mahalaxmi
temple, Haji
Ali, Mount Mary church etc.
The provision would not only create parking space around the
popular places of worship but also lead to creation of additional housing stock
by offering extra FSI. The
provision at places of worship also takes into account the security aspect
since shortage of parking has always been a security threat.
Defaults on housing loans are said to
be on the rise, with individuals
facing the brunt
of the high interest rate regime. An
indicator of this is the fact that of the total security
receipts (SRs) of Rs,1,100 crore issued by Asset
Reconstruction Company (India) Ltd (ARCIL) to banks between
April -September 2008 for
acquiring bad
loans 20% were from home loan
defaults.
Asset Reconstruction Companies (ARCs) expect a further jump in
housing loan defaults in the
coming quarters if interest rates do not climb
down. When an ARCacquires bad debts from a bank, based on a valuation they either pay cash or issue
SRs which are held in a trust and redeemed after realization of the
assets ARCIL, which is the pioneer in acquiring
distressed assets, had acquired these bad loans
in question from
around 20 banks. While a detail of individual banks
is not available, it
is learnt that ICICI Bank's portion of the
total SRs issued by ARCIL was about 30%.
According to ICICI Bank,
the total value
of delinquent loans sold by the bank to Arcil April 2008 onwards stands at Rs
608 crore for a sale consideration
in excess of62% of the
gross loan book. However,
it is not known what
portion of this
comprises retail
loan defaults.
According to an ICICI Bank spokesman:"Sale of retailNPAs has been one of the many tools
adopted by the bank to proactively manage delinquencies in the portfolio. It is
a standard activity undertaken in the normal course of business by all international banks. Sometimes
the sale is conducted every quarter. Also, this is only a very small portion in the over all delinquency management strategy of the bank."
NPAs have an adverse
impact on shareholders' value of banks and financial institutions by eroding
margins. ARCs acquiredistressed assets at a
discount depending on the credit realization potential of the asset.
An industry expert said
that banks would increasingly
use ARCs to hive off their distressed retail assets so that they are not
required to sully their hands in dealing with bad retail loans. An official from a newly floated ARC said that even though bad retail assets offers a huge opportunity,
it requires that right machinery to gain
monetary realization from
such assets.
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