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 Wind fall
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 suburbs and 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
city and 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 public parking 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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