News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
« General »
 Small savings schemes: Look at post-tax return before deciding to invest
 Financial services firms come under taxman’s scanner
 Filing Income Tax Return Using Aadhaar Leads To Allotment Of Aadhaar. Read Latest Rules Here
 If you are not paying income tax, get ready for I-T department's call
 Five things to expect from GST Council meet in Goa today
 Are steps on personal income tax coming?
 Here is how the tax cuts will help sectors
 You may not get tax refund if you haven’t validated your bank account
 Senior citizen tax benefits: From income tax to pension – 10 exclusive points explained
 RBI panel pitches for federal body like GST Council in farm sector
 Why should we pay more property tax’

SEBI asks AMCs to keep off realty debt
November, 24th 2010

Capital market regulator the Securities and Exchange Board of India (SEBI) has told asset management companies (AMCs) to avoid exposure to real estate debt in certain schemes. According to fund officials, SEBI has directed asset management companies to mention a negative sector list in their draft prospectus, and give an undertaking that they will not invest in sectors that appear in this list.

According to marketing officials at fund houses, the regulator is prodding fund houses to include real estate in the negative sector list. However, none of the fund houses ET spoke to, has received anything in writing on the negative sector list or to limit their exposure to real estate companies. It is only conveyed to fund houses verbally. The directive to include real estate in the negative list is happening more in the case of fund houses that are launching capital-protected schemes, said the investment head of a bank-promoted fund house.

The marketing head of a mid-sized fund house recently said at a press conference that it has been asked by the regulator not to invest in bonds issued by real estate companies. The fund house has also given an undertaking that the capital protection scheme, which it recently launched, will not invest in the black-listed sector, said the official. SEBI officials were not available for comment. An email query to SEBI remained unanswered at the time of going to press.

According to officials at fund houses, SEBI is worried about the debt repayment ability of real estate companies, which often take on too much debt. Also, the regulator is not satisfied with the reporting standards of most real estate companies. Balance-sheet strength, landbank valuation, authenticity of titles and project standards and execution are areas of concern for SEBI. In October 2008, many real estate companies were unable to meet their repayment schedule, forcing mutual funds to borrow externally to meet redemptions.

All regulators, including the RBI, are nervous about real estate, said Anuj Puri, India head, Jones Lang LaSalle, a real estate consulting firm.

At a broader level, we dont expect any trouble for developers. With respect to non-payment of debt, weve not seen real estate companies defaulting in the thick of recession. There was some rollover of debt, but that was there for a short period. Credit risks have reduced greatly, with most lenders opting to fund individual projects than capitalising the entire company, added Mr Puri.

According to analysts, real estate prices, across cities, have witnessed a significant appreciation in the recent past. In fact, prices in some regions have surpassed their highs of 2008. Real estate funding has also been picked up over the past 11 months. The period between January and August has seen private equity investors closing 25 real estate deals, totalling $990 million. Developers have raised Rs 1,109 crore by way of debt placements and Rs 2,225 crore by way of public issues.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2019 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Integrated Software Solutions Integrated Software Development Integrated Software Services Integrated Software Solutions India Integrated Softw

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions