Home Loan segment grew by 18.4% to Rs 5,40,800 crore in 2013-14

Bank Loan Commercial Real Estate Grew 22.4% to Rs. 1,54,400 crore in 2013-14

Indian Banks have been warming up to residential real estate because of higher returns and as demand always exceeds supply, especially in the metros.

Bank credit to commercial real estate grew 22.4% to Rs. 1,54,400 crore in 2013-14 over the previous year.


This is second only to loans given to micro & small enterprises, which posted 23.7% year-on-year growth in the same period.  Even the housing loan segment grew by only 18.4% to Rs 5,40,800 crore during this period.
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Key to Effective Wealth Creation : Smart Asset Allocation..

by Mr. P. Saravanan, IIM Shillong

Asset allocation is the process of distributing an investor’s wealth among different asset classes.

In other words, it is investing money in assets like equity, bonds, real estate, precious metals & other commodities to ensure that your investments are well-diversified.

Advantages..

Reduces investment risk..!
 A diversified portfolio is exposed to less risk as growth prospects are not limited to one security, but rather a basket of risky and non-risky securities across equity, debt, gold & real estate.
P. Saravanan, IIM Shillong

Less dependence on one asset class..!
Not all assets in a single asset class perform well at the same time. That’s why it’s important to choose different stocks and different categories of mutual funds.

In fact, funds need to be allocated efficiently even within the category.

Hedge against volatility..!
Anybody who invested before or / during the sub-prime crisis knows that when equities took a beating, debt & gold kept investors afloat. Those with pure equity portfolios are unlikely to repeat the mistake.

A well-allocated portfolio will protect you, and even offer growth, during times of volatility.

Freedom from market timing..!
 Those who try to time the market can testify to its volatility. Imagine timing market movement across different asset classes.
Investing minus stress is not very hard if you stop timing the market and implement a disciplined strategy.

Asset allocation & diversification are not the same. Diversification can be explained by the adage, ‘do not put all your eggs in one basket’. it involves spreading your money across instruments in the hope that if one investment loses money, others will more than make up for the loss.

Many investors use asset allocation as a way to diversify investments across asset categories.

For example, a 25-year-old investing for retirement can look at only equity, and a family saving for the downpayment of a house can invest entirely in cash equivalents.

Though reasonable under given circumstances, neither strategy attempts to reduce risk by holding different types of categories. So, choosing an asset allocation model would not necessarily diversify your portfolio. Whether your portfolio is diversified or / not will depend on how you spread the money among different types of investments.

Diversification..

This should normally be done at 2 levels. One, across asset categories and, two, within a category. Apart from allocating investments towards stocks, bonds, real estate, precious metals, other commodities, private equity & other asset categories, you will also need to spread investments within each category. The key is to identify investments in each category that may perform differently under different market scenarios.

One way of diversifying your investments within an asset category is to identify and invest in a wide range of companies and sectors. But the stock portion of your investment portfolio would be diversified if you invest, for example, in just 4 to5 stocks. You will need at least a dozen carefully selected stocks to be truly diversified.

Each individual’s financial plans and investment needs are different, changing with the life stage. How an individual structures his asset allocation strategy should depend on his age, financial status, future plans, risk aversion and needs. Asset allocation is not an isolated choice, but a component of the portfolio management process.


The writer P. Saravanan is an associate professor in finance and accounting at IIM Shillong.  ps@iimshillong.in. 
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Mr. Neerav Parmar takes over as chairman BAI, Mumbai

Mr. Neerav Parmar has taken over as the chairman of Builders’ Association of India (BAI), Mumbai Centre for 2014-15. He was appointed as the chairman by Sushanta Kumar Basu, President, BAI and Vimal Shah, President, MCHI-CREDAI.

He has been unanimously elected as BAI Mumbai centre chairman for 2014-15.

He was the hon. secretary of BAI Mumbai Centre for 2010-11 & 2011-12 and vice chairman for 2012-13 and 2013-14.
 
Neerav Parmar,
 chairman, BAI,
Mumbai.
Born in 1965, Mr. Neerav Parmar is a civil engineering graduate from Malaviya Regional Engineering College, Jaipur, who started his career with Billimoria & Co. and then worked with Lok Group and other companies.

On the professional front, after having ventured into contracting business for few years, he returned to serve the corporate construction world and worked for JMC Projects Ltd., Ackruti Ltd. (presently Hubtown Ltd.), Tata Housing Development, Kalpataru Ltd.

Currently, he is with Mr. Shapoorji Pallonji as associate vice-president, contracts & procurement.

Mr. Neerav Parmar is a life member of Indian Institution of Technical Arbitrators (IITArb) based in Chennai, and in May 2013 was elected unopposed as its senior vice president representing western zone for the period 2013 to 2015. He is also a member of Institution of Engineers and has also been involved in various social activities in his community.

At the BAI headquarters, Mr. Neerav Parmar has served as co-chairman of the Arbitration Committee for the year 2010-11, 2011-12 and 2012-13. He has been chairman of the Legal, Arbitration, Grievances and Public relations Committee of BAI headquarters for the year 2013-14.


BAI, established in 1941, is the apex all India association of civil engineering construction contractors and builders with more than 150 centres (chapters) spread across the length and breadth of India it has 30,000 plus members.

Registered & Head Office:
G-1/G-20, Commerce Centre, J. Dadajee Road,
Tardeo, Mumbai 400034
Tel.: (91-22) 23514134, 23514802, 23520507
Fax : (91-22) 23521328
E-mail: baihq.mumbai@gmail.com
Mr. Raju John 
Executive Secretary
Mobile : +91 9323576860
Mr. S. Madhusudan 
Head – Communications
Mobile : +91 9820517064
Delhi Office:
D1/203, Aashirwad Complex
Green Park Main, New Delhi 110016
Tel.: (91-11) 32573257
Telefax: (91-11) 26568763
E-mail: baidelhi16@gmail.com.
Mr. Satnam Singh Arora
Executive Officer
Mobile : +91 9811912407

BAI Mumbai Centre Team 2014-15
Chairman
Mr. Neerav Parmar
Vice-Chairman
Mr. Pradeep Nagawekar
Hon. Secretary 
Mr. Gyan Madhani
Hon. Treasurer
Mr. Mohinder Rijhwani
Hon. Jt. Secretary 
Mr. Santosh Navle
Hon. Jt. Treasurer
Mr. Harshad Shah
Executive Committee Members :General Council Members :
  • Mr. A. B. Chitale
  • Mr. A. R. Jambekar
  • Mr. Chandulal Jain
  • Mr. Jailesh Dalal
  • Mr. Prashan Dongre
  • Mr. Ravi Harisinghani
  • Mr. Shyam Seernani
  • Mr. Tejas Shah
  • Mr. A. L. Gadgeel
  • Mr. C. H. Ramchandani
  • Mr. H. I. Chuggani
  • Mr. Lachhman Rijhwani
  • Mr. Pukhraj Mehta
  • Mr. Shantibhai Dhanjibhai Patel
  • Mr. Sudhakar Sukhdeo Mody
  • Dr. Anand J. Gupta
  • Mr. Harshad Shah
  • Mr. Mahesh M. Mudda
  • Mr. Pradeep Nagwekar
  • Mr. Santosh Navle
  • Mr. Harshad Bhayani
  • Mr. Jaiprakash Bhatia
  • Mr. Mohinder Rijhwani
  • Dr. S. K. Manjrekar
  • Mr. Vimal Shah
 
General Council Members representing Patron Members from Mumbai Centre :
Mr. C. G. DeochakeMr. L. D. KotwaniMr. Ram M. BhatiaDr. Taro T. Manghnani
 
Ex-officio General Council members
  • Chairman
    Mr. Neerav Parmar
  • Past President
    Mr. H. J. Shah
  • Past President
    Mr. S. A. Vichare
  • Trustee 2013-16Mr. D. L. Desai (Shankarbhai) 
  • Past President
    Mr. Ajit Gulabchand
  • Trustee (2010-13)
    Mr. Bhagwan J. Deokar
 
PAST CHAIRMEN OF BAI MUMBAI CENTRE (Permanent Invitees to the Executive Committee)
  • 1982-83
    Mr. B. E. Billimoria
  • 1983-85
    Mr. Gopal N. Harisingani
  • 1989-91
    Mr. S. K. Choudhury
  • 1991-92
    Mr. P. G. Bansi
  • 1978-79
    Mr. S. A. Vichare
  • 1985-87
    Mr. Rasiklal Shah
  • 1992-94
    Mr. Bhagwan J. Deokar
  • 1994-95
    Dr. Narendra D. Patel
  • 1995-97
    Mr. Ram M. Bhatia
  • 1997-98
    Mr. C. T. Sanghavi
  • 1998-2000
    Mr. D. L. Desai (Shankarbhai)
  • 2000-2003
    Mr. L. D. Kotwani
  • 2003-2004
    Mr. C. G. Deochake
  • 2004-2006
    Mr. Bhushan Mehta
  • 2006-2008
    Mr. Anand J. Gupta
  • 2008-2010
    Mr. Mahesh M. Mudda
  • 2010-2012
    Mr. Mahendra Shah
  • 2012-14
    C. G. Deochake
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Focus on Affordable Housing to Catalyse Investments

By Mr. Rana Kapoor, ASSOCHAM

India has about 495 urban cities with over 1 lakh population and  about 7,935 cities and towns, which can act as catalysts of economic growth.

ASSOCHAM ( Associated Chambers of Commerce and Industry of India ) believes that Affordable Housing sector has the potential to stimulate significant and immediate multiplier effect in creating employment and demand in key sectors, like Power, Steel and Cement, thereby reinvigorating the economy.

The country currently requires 1.878 Crore additional houses, of which 95.62 % are in the Economically Weaker Section (EWS) / Lower Income Group (LIG) / Middle Income Group (MIG).
 
Rana Kapoor, ASSOCHAM
ASSOCHAM recommends the following measures in the Affordable Housing sector:

Immediate / short term objectives should consider:

Providing an infrastructure status for the Affordable Housing sector to attract more capital and investment formation

Digitisation of land records..

• Insurance / Pension funds to be allowed to invest in the Affordable Housing sector.

• •  Ease the conditions for Foreign direct investment (FDI)  in real estate and reduce minimum capital requirement from $10 crore $50 lakh and minimum tenure before repatriation from 3 years to 1 year.

• • Review / Repeal Sec 43C in the Income Tax Act on taxation at circle rate and restore 80 IB (10).

• • Tax exemption on income derived by an undertaking, engaged in development and construction of smaller dwelling units.

• • Review RBI (Reserve Bank Of India) norms for project finance; uniformity in the end user income ceiling norms for Affordable Housing units for EWS and LIG.

• • Impetus to the essential infrastructure at the outskirts of tier I / or tier II cities to ensure Affordable Housing clusters are well connected and cities are de  to  congested.

Medium / long term objectives should consider..

• Rationalisation of Direct and Indirect taxes in the real estate industry to enable competitive pricing for the end user.

••  Single window approval mechanism for Housing Sector as against approvals through 150 tables across 40 departments of Centre, State Govt. and Municipal Corporations.

•  • Mandating developers across country to construct EWS / LIG units and authority to create enabling environment with increased Floor Area Ratio / Floor Space Index (FAR / FSI).

• • Incentivize low cost and innovative technologies such as prefab for producing large volumes of Affordable Housing units.

• • Develop a full proof mechanism for rental housing and ensuring implementation of REITs (Real Estate Investment Trusts ) under the same.

•  • Availability of higher FSI with relaxed density norms for Affordable Housing projects.

I believe India is at a crossroads of experiencing rapid urbanization in the current decade and addressing the concerns of Affordable Housing is the need of the hour.

Given the slowdown in the real estate sector, additional HNI (High Net Worth Individuals) investments in the sector at high interest costs and the increase in ready reckoner rates by some state governments, will only push up property prices further. Taking adequate and appropriate measures to increase Affordable Housing alternatives will not only create a GDP (Gross domestic product ) multiplier, but also improve the living standards of Indian citizens.

About the author
Mr. Rana Kapoor is President at ASSOCHAM
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Bajaj Allianz General Insurance: My Home Insurance

Bajaj Allianz General Insurance: My Home Insurance with unique features

 ·  All risk policy that covers Flat / Apartment on an Agreed Value Basis

Bajaj Allianz General Insurance has launched a new home insurance product called “My Home Insurance All Risk Policy” with some unique features introduced in the Indian market for the first time. The unique features are  to 



·    It is an All Risk Policy that covers losses due to perils other than those specifically excluded unlike the existing home insurance policies available in the market that cover only specified risks.

·    Flats / Apartments can be covered on Agreed Value Basis in addition to Reinstatement Value Basis or Indemnity Basis. The cover for Agreed Value Basis is introduced for the first time in India.

·    Independent Buildings can be covered only on Reinstatement Value Basis or Indemnity Basis.

·    Flat / Apartments and Independent Buildings up to 30 Years can be covered under this Policy.

·    Gives you a longer term cover for up to 3 years for Building and Contents.

·    There is a provision for automatic reinstatement of Sum Insured.

·    Mid-term increase of Sum Insured is allowed on pro-rata basis.
Lalita Raman, Zonal Manager - South, Bajaj Allianz General Insurance, said, “Today, buying a home involves one’s hard-earned money for years, given the rise in real estate prices. Increase in the number of crime cases like theft, burglary also exposes the home to many risks. Therefore, we decided to bring in an innovative and comprehensive all risk home insurance that will cover all possible risks.

Thepolicy gives you provision to cover theFlats / Apartments on Agreed Value Basis in addition to the Reinstatement ValueBasis or Indemnity Basis.The Reinstatement Value Basis is the construction cost excluding value of the land or the apartment. Market Value Basis is the amount arrived at for the reconstruction or replacement cost, less depreciation of the building or apartment.

“My Home Insurance has been launched considering the absence of adequate policies that promise of covering your dream home with a right value. Also, the non-existence of essential benefits like covering precious household items, furniture, artworks or jewellery has prompted us to bring in such an all-encompassing home insurance policy”, added Lalita Raman. 

Key Features..
·    All risk cover for “Building, Contents, Jewellery, Valuables, Works of Art, Curios & Paintings” under single policy.

·    The policy offers 6 plans under the categories of Gold, Diamond and Platinum

·    The policy has 8 add on covers like loss of rent, temporary resettlement cover, public liability, dog insurance cover, ATM withdrawal cover, lost wallet cover, key and lock replacement cover, employee’s compensation cover for domestic staff. This will help the insured customize their policy.

·    There is no excess that is applicable for claims; however Insured can opt for voluntary excess ranging from Rs.5000/- to Rs.50000/- each and every claim and avail of a discount in premium ranging from 5% to 35%. Insured has the Option to cover  Building only, Contents only OR both


·    Various Sum Insured options available under different sections

o Building/Structure  to  Sum Insured can be calculated on IndemnityBasis, Reinstatement Value Basis for Flat/Apartment/Independent Buildings and Agreed Value Basis only for Flat/Apartment

o Contents  to  The sum insured options available are New for Old Basis and IndemnityBasis

o Jewellery and Valuables  to  Market Value Basis or Agreed Value Basis

o Works of arts, paintings and curios  to  Agreed Value Basis subject to submission of valuation report.

·    Contents include all household items,domestic appliances, electrical and electronic equipment up to an age of 10 years and portable equipment up to 5 years.

·    In case the customer opts for insurance of contents only, the minimum sum insured should not be less than Rs.5 lakh.

·    No list of contents required where the sum insured is above Rs. 5 lakh.

·    Worldwide coverage extension is available for Jewellery & Valuables andPortable Equipment on payment of additional premium.

·    Automatic reinstatement of sum insured in case of a loss for the contents.

·    An inbuilt cover that provides for additional expenses of rent in case of an alternate accommodation.

·    Coverages for damage due to earthquake and terrorism are also inbuilt.

·    There is also no under insurance is applicable for Flat/Apartment on Agreed Value Basis. For Policies Issued on Agreed Value Basis, in the event of a claim the procedure for claims settlement is simple and hassle-free.

·    No excess/deductible is applicable for claims; however Insured can opt for voluntary excess ranging from Rs.1000/- to Rs.20000/- each and every claim and avail of a discount in premium ranging from 5% to 50%

It is an easy to understand policy which involves minimum documentation at the buying stage.

Indicative Premium:

Case 1:
If sum insured for a flat or apartment with a built-up area of 1000 square feet in a premium localityin a city is estimated at Rs. 40 lakh on Agreed Value Basis, the tentative premium would be Rs.1,800 a year.
When a customer opts for cover as per Agreed Value, the ownership of the home has to be transferred to the insurance company after the claim is settled following a total damage. 

Case 2:
With an estimated construction cost of Rs. 2,200 per sq ft in same locality, sum insured and tentative premium for a building (or apartment or flat) with 1000 square feet constructed area based on Reinstatement Value would be Rs. 22,00,000 and Rs. 990, respectively. 

Case 3:
If sum insured is set at say Rs. 22,00,000 for a building (or apartment or flat) with 1000 sq ft area based on Indemnity in same locality, the premium would beclose to Rs 990.

Customers can avail discounts, if they buy My Home policy for two (7%) or three (20%) years.

Category
Construction/Built-up area
Rate/sq ft
Sum insured
Tentative premium (excluding Service Tax)
Agreed Value Basis
Built-up area 1000 sq ft
Rs. 4000
Rs. 40,00,000
Rs. 1,800
Reinstatement Value Basis
Construction area 1000 sq ft
Rs. 2200
Rs. 22,00,000
Rs. 990
Indemnity
Building area 1000 sq ft
Rs. 2200
Rs. 18,00,000
Rs. 720

About Bajaj Allianz General Insurance ..

Bajaj Allianz General Insurance, a joint venture between Allianz SE, the world’s leading insurer, and Bajaj Finserv Limited. Allianz SE is a leading insurance conglomerate globally and one of the largest asset managers in the world.Bajaj Allianz General Insurance is one of the leading private general insurance companies in India. 

The Company offers various general insurance products like motor insurance, home insurance, health insurance and also unique insurance plans such as wedding insurance, event Insurance, film insurance.Bajaj Allianz General Insurance has been a profit-making company since its inception. The Company began its operations in 2001 and today has a pan-India presence with 200 towns and cities in India. The Company has been constantly expanding its operations to be close to their customers.

For Further Information
Santosh Balan: +91 98 600 97056 or Chandni Arora: +91 99 520 55013 
or Ayan Pramanik: +91 97 302 40099

Bajaj Allianz Jagdish Charloo  <Jagadish.Charloo@bajajallianz.co.in>, Bajaj Allianz 
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