Indian Cabinet approves amendments to the Real Estate Bill.

The Union Cabinet approved amendments to the long pending Real Estate (Regulation and Development) Bill, 2013.

The Bill provides for a uniform regulatory environment, to protect consumer interests, help speedy adjudication of disputes and ensure orderly growth of the real estate sector. The Bill contains provisions of registration of real estate projects and registration of real estate agents with the Real Estate Regulatory Authority; functions and duties of promoters and allottees; establishment of Real Estate Regulatory Authority; establishment of fast track dispute resolution mechanism through adjudication; establishment of a Real Estate Appellate Tribunal; offences and penalties etc.

The Bill ensures mandatory disclosure by promoters to customers through registration of real estate projects as well as real estate agents with the Real Estate Regulatory Authority and attempts to institute transparency and accountability in real estate and housing transactions.

The salient features of the Bill are as under:-

(a). Applicability of the Bill:

The proposed initial Bill was applicable for residential real estate. It is now proposed to cover both residential and commercial real estate;

(b). Establishment of Real Estate Regulatory Authority:

· Establishment of one or more ‘Real Estate Regulatory Authority’ in each State/ Union Territory (UT), or one Authority for two or more States/UT, by the Appropriate Government for oversight of real estate transactions,
· To appoint one or more adjudicating officers to settle disputes and impose compensation and interest;

(c). Registration of Real Estate Projects and Registration of Real Estate Agents:
Mandatory registration of real estate projects and real estate agents who intend to sell any plot, apartment or building, with the Real Estate Regulatory Authority;

(d). Mandatory Public Disclosure of all project details:
Mandatory public disclosure norms for all registered projects such as details of promoters, project, layout plan, plan of development works, land status, status of statutory approvals and disclosure of proforma agreements, names and addresses of real estate agents, contractors, architect, structural engineer etc.;

(e). Functions and Duties of Promoter:
· Disclosure of all relevant information of project;
· Adherence to approved plans and project specifications;
· Obligations regarding veracity of the advertisement for sale or prospectus;
· Rectify structural defects;
· Refund money in cases of default;

(f). Compulsory deposit of 50 percent:
To compulsorily deposit 50 percent (or such lesser percent as notified by the Appropriate Government) of the amounts realized for the real estate project from the allottees in a separate account in a scheduled bank within a period of fifteen days to cover the cost of construction to be used for that purpose;

(g). Adherence to declared plans:
· To bar the promoter from altering plans, structural designs and specifications of the plot, apartment or building without the consent of two-third allottees after disclosure;
· However, minor additions or alterations permissible due to architectural and structural reasons;

(h). Functions of Real Estate Agents:
· Real estate agents to sell properties registered with the Authority;
· Maintain books of accounts, records and documents;
· Not to involve in any unfair trade practices;

(i). Rights and Duties of Allottees:
· Right to obtain stage-wise time schedule of project;
· Claim possession as per promoter declaration;
· Refund with interest and compensation for default by the promoter;
· Allottees to make payments and fulfill responsibilities as per agreement;

(j). Functions of Real Estate Regulatory Authority:
The Authority to act as the nodal agency to co-ordinate efforts regarding development of the real estate sector and render necessary advice to the appropriate Government to ensure the growth and promotion of a transparent, efficient and competitive real estate sector;

(k). Fast Track Dispute Settlement Mechanism:
· Fast track dispute resolution through adjudicating officers (District Judge);
· Appellate Tribunal to hear appeals;

(l). Establishment of Central Advisory Council:
To advise the Central Government on implementation of the Act, recommend policy, protection of consumer interest and to foster growth and development of the real estate sector;

(m). Establishment of Real Estate Appellate Tribunal:
Real Estate Appellate Tribunal to hear appeals from orders of the Authority and the adjudicating officer. The Appellate Tribunal is to be headed by a sitting or retired Judge of the High Court, with one judicial and one administrative/technical member;

(n). Punitive Provisions:
Punitive provisions including de-registration of the project and penalties in case of contravention of provisions of the Bill or the orders of the Authority or Tribunal;

(o). Bar of Jurisdiction Courts:
Provision for barring jurisdiction of court and any authority from entertaining complaints in respect of matters covered under the Bill;

(p). Power to make Rules and Regulations:
· Appropriate Government to have powers to make rules over subjects specified in the Bill;
· Regulatory Authority to have powers to make regulations;

The Bill aims to protect consumers and curb “black money” . “The bill seeks to ensure accountability and transparency, which will in turn enable the real estate sector to access capital and financial markets essential for its long-term growth,” the government said in a statement.


Indian, IFC officials welcome Indian rupee denominated bond

Source: Press Trust of India

The launching of a Indian rupee denominated bond by International Finance Corporation, a member of the World Bank group, is possibly the first step towards internationalization of the Indian currency, top Indian and IFC officals have said.

“This is for the first time that a Indian rupee denominated bond is being launched in the global market,” the Economic Secretary Arvind Mayaram told a group of Indian reporters yesterday after the IFC — a member of the World Bank Group — announced to launch a USD 1 billion offshore rupee bond program which he described as a key step towards “process of internationalisation of Indian rupee bond market.”

Mayaram said through this he expects that investors who have not yet come into India, to enter the Indian bond market.

“This would be one of the ways in which we can channelise global savings towards investing in India, especially the infrastructure sector,” Mayaram said yesterday.

Echoing Mayaram, Jingdong Hua, IFC vice president and treasurer described it as “internationalisation of rupee”, which he has have not heard this before.

“I as the IFC treasurer, looking at India, China and the US as the top three economies by 203, would like to offer Indian rupee as a currency of IFC as routine as US dollar,” he said.

The USD 1 billion offshore rupee bond program is largest of its kind in offshore rupee market.

Under the program IFC will issue rupee-linked bonds and use the proceeds to finance private sector investment in the country.

“It is a major development, as far as we are concerned in providing long term assured finance in several areas including infrastructure which is now looking for financing,” Mayaram said in response to a question.

The IFC, he said, is raising the bond and would be providing long term loans to projects approved by it.

Mayaram hoped that once this effort is successful in raising USD 1 billion in rupees through the international market, the IFC would follow it up with several other launches in the coming years.

“This is the first time that we are testing how global rupee bond issuance is accepted by the world. Once it is done, there is a possibility that other Indian finance companies, they could also possibly go into the global market to get finance.That is the future. We still need to see how the issuance of the bond is taken by the market,” he said.

“Even though we are going through a major global uncertainty at this point of time, and many emerging markets including India are facing challenges which have in some way got a shadow on the high growth trajectory they were witnessing, even the leader of the pack China has now witnessed slowdown. And it is a matter of concern,” he said.

“In my mind, I have no doubt at least for India, we have the resilience and the commitment to do whatever it takes which includes very policy reforms of opening of economy of providing the support that is required in increasing the confidence of the investors and in this regard we have recently taken major overhaul of foreign direct investment policy of India,” he added.


India relaxes foreign investment rules

India has further liberalized the foreign direct investment (FDI) rules in various industrial sectors including telecoms, single brand retail and oil and gas. 10o percent FDI will be allowed in the telecoms sector. Foreign invetsors are currently allowed to hold a maximum of 74 per cent in local phone carriers. This means that companies like Vodafone, Telenor and other major international telecom companies will be able to operate in India without requiring an Indian partner. 100 percent FDI will be allowed in single brand retail – 49 per cent through the automatic route and 49-100 per cent through the Foreign Investment Promotion Board (FIPB). The FDI limit of 49 percent in civil aviation and 26 percent in defence production remains the same. However, a FDI proposal above 26 per cent may be considered if the investment is in the state of the art technology. The following are some of the highlight of the new FDI limits:

  • Telecoms –FDI cap raised to 100 per cent from the current 74 per cent.
  • Civil Aviation – No change from the current limits of 49 per cent.
  • Defence production – FDI cap in defence production to remain at 26 per cent. Consideration may be given to proposals above 26 per cent if investment is in state of the art technology.
  • Single brand retail – 100 per cent FDI allowed in single brand retail – 49 per cent through the automatic route and 49-100 through the FIPB route.
  • Insurance – FDI limit raised to 49 percent from the existing 26 per cent.
  • Petroleum refining – FDI upto 49 per cent allowedunder automatic route compared with the current policy of FIPB approval route.
  • Power exchanges – 49 per cent FDI allowed through the automatic route compared with the current FIPB route.
  • Asset Reconstruction companies – FDI limit raided to 100 per cent from the current 74 per cent. Up to 49 per cent will be through the automatic route.
  • Credit information companies – FDI limit raised to 74 per cent from the existing 49 per cent.
  • Stock Exchanges – 49 per cent FDI allowed under automatic route.
  • Courier services – 100 per cent FDI allowed.
  • Tea plantations – FDI raised to 49 per cent through the automatic route; 49 – 100 per cent through the FIPB route.

This new FDI rules comes at a time when the Indian Rupee is at an all time low against the US dollar, hitting an all time low of 61.21 against the US dollar. The government will be hoping that the relaxation in the rules will attract investment, strangthen the currency and bolster the economy.


India joins the Madrid Protocol

India has finally joined the international trademark system by becoming a member of the Madrid Protocol for International Registeration of Marks. According to WIPO, the treaty will come in force on July 8, 2013. The Madrid Protocol allows trademark owners to extend their protection in all the member countries in a cost effective manner by filing a single aplication.  The treaty will benefit the Indian buisnesses by allowing them to file a single application to register their trademark in the member countries of the Protocol. Similarly, foreign brand owners  will have the ability to extend their protection to the Indian market, through a single, simplified and cost-effective procedure. India’s accession has brought the total number of member countries of the Madrid Protocol to 90.