PMC To Propose Appointment Of Arbitrator For Water/Property Disputes

PUNE: The Pune Municipal Corporation (PMC) is likely to come up with a proposal to appoint an arbitrator for settling cases related to property and water tax disputes.

The move assumes significance as there are nearly 350 disputed cases related to taxes and the total amount which is to be recovered is nearly Rs 280 crore. The cases have been pending in courts for many years. The issue came up for discussion at the standing committee on Tuesday.

Civic officials told the committee members that around Rs 210 crore dues pertain to water taxes while dues worth Rs 70 crore pertain to property taxes.

Senior committee member and corporator Ujjwal Keskar suggested that the municipal corporation should appoint an arbitrator to resolve the tax disputes. He also suggested that the municipal corporation should first announce an amnesty scheme for citizens to pay their tax dues. He pointed out that a few years back, when the corporation had announced an amnesty scheme for new property holders, nearly 14,000 property owners had come forward to pay their taxes. According to Keskar, the civic administration has agreed to both the suggestions and is likely to come out with a proposal next week for appointing an arbitrator.

Meanwhile, the committee deferred the hoardings policy tabled by municipal commissioner Mahesh Zagade. Civic officials told the meeting that there are a total 2,313 authorised advertisement hoardings in the city, but the number of unauthorised hoardings is over 5,000.

The committee also discussed the issue of taking action against jewellery shop owners who have not paid octroi on gold and silver since April this year. The administration stated that it had issued notices to the jewellers in this regard. The committee was informed that the new Rajiv Gandhi hospital in Yerawada will start functioning next month.

Meanwhile, committee chairman Arvind Shinde directed the PMPML to stop the CNG pump for autorickshaws at the Narveer Tanaji Wadi bus depot as the pump had been started without taking any prior permission from either the PMC or the PMPML board of directors.

Flat Registration Offices To Be Linked To Curb Scams

At a time when property registration frauds are becoming increasingly commonplace, the state government has decided to interlink all sub-registrars’ offices. The move will curb instances of a single flat or a property being registered in names of multiple buyers. Once the offices are connected, registration officials will be able to verify if a sale deed has been registered at any other sub-registrar’s office on an earlier occasion.

At present, property transactions in Mumbai, Pune, Thane and Nagpur can be registered at any of the sub-registrars’ offices located in each district. This means that even if your house is in Bandra, you can get it registered, say, at the Borivli sub-registrar’s office. However, there’s a flaw in this system. As the sub-registrars’ offices are not interlinked, officials have no way of ascertaining if the same flat or property has been registered elsewhere.

Unscrupulous minds have been exploiting this very lack of coordination and instances of a single flat being registered in the names of multiple buyers have surfaced. In the absence of a common database on property registrations, many citizens had to run from pillar to post to get their home loans approved as banking officials found it hard to get correct details during the verification process.

The issue was recently raised in a meeting called to discuss how to better disbursement of home loans. The meeting, held in Mantralaya, was chaired by chief secretary J P Dange. During the meeting, housing secretary Sitaram Kunte pointed out that there has been a sharp rise in property registration frauds. “Taking cognizance of the issue raised by Kunte, Dange directed the officials concerned to rectify the registration system at the earliest to prevent recurrence of such scams,” a senior Mantralaya official said.

Collections from registration and stamp duty have witnessed a four-fold hike in the last decade. The government earned Rs 2,200 crore during the financial year 2000-01, while the figure shot up to Rs 9,600 crore in 2009-10.

Pune Property Tax Defaulters To Face 2% Monthly Fine

PUNE: The Pune Municipal Corporation (PMC) has decided to execute the state government’s notification to impose a two per cent penalty on people who fail to pay their property tax for the first six months of the year 2010-11 before September 30.

The government notification of May 31, 2010, has authorised the civic body to impose a fine of two per cent on the tax amount for every defaulting month if the property tax is not paid within a given period of time. The second instalment of the property tax has to be paid before December 31, 2010.

In the last two years, the PMC has brought nearly 80,000 properties under its tax net. However, an estimated 45,000 properties still remain out of its reach. The standing committee has repeatedly told the administration to make an effort to widen its tax net. Once the unassessed properties are covered, the civic body is expected to get an additional revenue of Rs 100 crore to 150 crore.

The PMC’s tax collection and assessment department has already submitted a plan regarding this to the standing committee. After octroi, property tax is a major source of revenue for the PMC. The department has proposed that digital pictures of all properties be taken for records and an aluminium plate be fixed on each property, identifying its survey number and other details.

Meanwhile, in order to improve collection of property tax, the civic administration has proposed that zone-wise agencies be appointed to assess properties and bring unassessed properties under the tax net.

PCMC Hospitals To Go Paperless

Hospitals run by the Pimpri Chinchwad Municipal Corporation (PCMC) are all set to go paperless. From October 11, PCMC will start registration of patients, following which they would be issued health cards.

The health card will be the size of a credit card with a digital chip fitted inside. This will eliminate the hospitals’ need of storing case papers.

The first hospital to go paperless will be the Yashwantrao Chavan Memorial Hospital (YCMH).

The decision regarding the same was taken in a recent meeting attended by Municipal Commissioner Asheesh Sharma, standing committee members and health department officers.

Currently, PCMC runs eight hospitals in the city. All the patients who come to these hospitals have to first get their case papers made.

These papers contain the details of the patient and the treatment given for a particular illness. Storing these papers is a cumbersome process.

The new system was proposed to ensure easy management of patients’ data. For this project, PCMC has earmarked Rs. 3.5 crore.

The patients would be charged a nominal fee of Rs 15 per health card. The scheme would first be implemented in YCMH, following which it would be extended to other hospitals run by PCMC.

Currently, it is seen that people from all the adjoining talukas and villages near Pimpri Chinchwad seek treatment at civic hospitals.

Since the hospitals are run by PCMC, all the citizens staying in PCMC limits should be given priority as the hospital is run on the taxes paid by them.”

PCMC Approves Proposal To Plant 40,000 Saplings

PUNE: The standing committee of Pimpri-Chinchwad Municipal Corporation (PCMC) on Tuesday approved the controversial proposal to plant 40,000 saplings on Bhandara hill at Dehu village, at a cost of Rs 91.82 lakh.

Prashant Shitole, chairman, standing committee, PCMC said, “A maximum number of medicinal plants will be planted in this drive.”

The controversy was on two counts. The first being whether the PCMC should spend a large amount of money on a project outside the municipal limits and second related to the proposal being tabled before the standing committee after the civic general body had already approved it.

Shitole said, “The contractor will plant the saplings, water them and look after their security for two years, ensuring their survival.”

The standing committee kept the health department’s proposal, regarding hiring of 700 contract labourers for one year to help maintain sanitation and cleanliness at a cost of 3.78 crore, pending.

The proposal has been kept pending for one week and the administration has been directed to give information as to the number of contract labourers needed as per the latest population of the township. Detailed discussions will be held at the next weekly meeting.

Shitole said, “The health department has a shortage of manpower. It has prepared a list of the number of existing health employees and the required number of employees for each ward as per the population figures of 2001 census. The PCMC had received bids from 35 organisations to supply contract labourers.”

He added that the population of the PCMC limits has increased in the past 10 years, so there was a need for more health employees.

He further said that the proposal to purchase 14,172 water meters at the cost of Rs 2.80 crore was approved without any discussion.

“The PCMC has installed more than a lakh water meters in the municipal limits and only a few water more need to be installed,” Shitole stated.

He said that the proposal to get an internet connection from Bharat Sanchar Nigam Limited (BSNL) for the online birth and death certificate system at the cost of Rs 8 lakh per year was also approved.

A short notice resolution to provide loud speaker system to all the day care centres for senior citizens run by senior citizens’ organisations in the municipal limits was also approved.

Home And Personal Loans To Cost More

The Reserve Bank of India (RBI) on Thursday hiked policy interest rates, sending a message to banks that they need to do the same for their loans. The silver lining is that interest rates on fixed deposits will also rise from the current 7-8% levels.

The RBI increased the repo rate (the rate at which it lends money to banks) by 25 basis points to 6% and the reverse repo rate (the rate at which the RBI takes out excess cash in the banking system) by 50 basis points to 5% with immediate effect.

The central bank did this primarily to contain inflation and to ‘normalise’ policy rates, considering the speed at which India’s economy is growing. Interest rate is a monetary tool used by central banks to ensure that a fast-growing economy doesn’t get out of hand — primarily, that prices of goods, or inflation, don’t spiral out of control due to excessive demand, the hallmark of fast-growing economies.

This is done essentially by controlling the amount of money floating in the economy by raising or lowering interest rates. When an economy declines, the opposite happens — central banks lower interest rates so that people are persuaded to buy goods and thereby generate demand.

“The RBI believes inflation has plateaued (and the declining trajectory inline with its projection), but it highlights that it will remain at ‘unacceptably’ high levels for a few more months.

It hence believes that there is a need for continued policy response to contain inflation and anchor inflation expectations,” said Ashutosh Datar, economist with the brokerage IIFL.

“The broad indication of the RBI action on Thursday is that lending rates will rise. We will take a call in a few days on increasing our personal and home loan rates because the impact of this rate hike will have to be passed on to consumers,” said Kamlesh Rao, executive vice president (personal loans and home finance), Kotak Mahindra Bank.

The timing of the hike will vary from bank to bank, depending on the cost of their money.

“On the interest rate scenario there is definitely an upward bias. But the hike may not be immediate. It will depend upon the credit pickup. Initially, it may be a hike of 25 basis points,” said MD Mallya, chairman and managing director, Bank of Baroda.

It seems both the RBI and the government want fixed deposit rates to rise.

“If bank credit is not to become a constraint on growth, real interest rates need to move in the direction of encouraging bank deposits,” the RBI said on Thursday.

On Wednesday, the government raised the employees provident fund rate by 100 basis points to 9.5%.

Banks had already resorted to hiking their benchmark prime lending rate, or BPLR, in August, citing reasons that their costs were going up. In the near future, they may hike it further and may even hike the base rate, which came into existence from July 1 this year.

“The BPLR may be hiked further as most of the lendings happen through it, and there is also the likelihood that the base rate may be hiked in the next quarter since banks have the option to change the base rate every quarter for the first year,” said Deepak Tiwari, banking analyst at KR Choksey Shares & Securities.

“Borrowing rates will go up for both consumers and developers,” said Shobhit Agarwal, Joint Managing Director (Capital Markets), Jones Lang LaSalle India, a real estate consultancy. Conversely, this could mean demand for homes, and therefore their prices, may decline.

“The projects that are already priced high, the impact in terms of demand erosion will be higher. We don’t see much impact on low-cost housing, that is Rs25-50 lakh purchases,” said Agarwal.

But teaser home loan rate — where you pay a low interest rate in the first year and more later — won’t be discontinued as they are a hot favourite among borrowers.

“I expect teaser loans to continue as they are so popular with people. But I think banks may continue those schemes with a slight increase in rates, said Harsh Roongta, CEO of apnapaisa.com, a personal finance advisory. The State Bank of India (SBI) is offering teaser home loans till September 30 and the committee will take a decision on whether to extend it further or not on September 28, said a senior SBI official.

RBI Pitches For Higher Deposit Rates

Unfortunately, banks look set to raise lending rates by October, too.

A day after the Employees Provident Fund Organisation trustees raised the interest rates on PF deposits by 100 basis points to 9.5 per cent, the Reserve Bank of India on Thursday signalled banks to raise deposit rates to attract investors who have been shifting to other instruments.

In its first ever mid-quarter monetary policy review, RBI said if bank credit was not to become a constraint to growth, real rates needed to move in the direction of encouraging bank deposits.

“The policy actions taken over the past three quarters were partly driven by the need to end the prevalence of negative real interest rates,” it said.

Interest rates are said to turn negative when the interest rate on deposits are lower than the prevailing inflation rate, eroding the value of depositors’ money. While inflation has been hovering in double digits, deposit rates have been in the range of 6-7.75 per cent in this financial year. As a result, banks have seen deceleration of deposit growth, as savers have been shifting to other instruments for higher returns.

Hinting at upward rise in deposit rates, S S Mundra, executive director of Union Bank of India, said: “There is a clear signal in the mid-quarter review of policy on deposit rates. There is probably need to rethink. The extent of revision would differ from bank to bank.”

Deposit growth has not exceeded 15 per cent since the second half of April, against RBI’s projection of 18 per cent deposit growth for the current financial year. Banks have mobilised Rs 44,396 crore in this financial year since April, while the incremental lending went up by Rs 1,10,996 crore.

Deposits grew 14.4 per cent year-on-year as of August 27. During the fortnight ended August 27, deposits mobilised by banks had gone up by Rs 38,658 crore.

Following the central bank’s cues from the first-quarter monetary policy review on July 27, as many as 40 banks had raised interest rates on short-term and medium-term fixed deposits by as much as 150 basis points. The central bank had asked banks to beef deposit mobilisation in the first-quarter policy review to avoid any asset liability mismatch.

Since March, RBI had raised the repo rates by 125 basis points this year to six per cent and the reverse repo by 175 basis points to five per cent.

Lending rates to rise

As a result of tight liquidity, home and auto loans are expected to go up but not immediately. Bankers expect the credit demand to pick up on the back of good monsoon and strong IIP (index of industrial production) growth in July.

“There is upward bias on lending rates since we have increased our deposit rates. We will revise rates when we review our base rate in October. There is definite indication for it go up and (this) depends on cost of funds,” said Bank of Baroda’s executive director, R K Bakshi.

Banks will review their base rate for the first time in October. Subsequently, interest rates for the home, auto and commercial sectors will increase.

“Banks are at the onset of the busy season. The credit pick-up would also shape the interest rate trend,” added Mundra.

“Borrowing rates will go up for consumers as well as for developers. For the projects that are already priced high, the impact in terms of demand erosion will be higher. We don’t see much impact on low-ticket sizes such as Rs 25-50 lakh purchases,” said Shobhit Agarwal, joint managing director – capital markets, Jones Lang LaSalle India.

“Tight liquidity scenario is expected to prevail, which will further strengthen the policy transmission and is expected to result in banks increasing their lending and deposit rates,” said Ashwin Parekh, partner, Ernst and Young.

By increasing the repo and reverse repo rates, RBI had further reduced the liquidity adjustment facility rate corridor to 100 basis points. This is expected to reduce volatility in short-term interest rates.

Credit had grown by 19.4 per cent on a year-on-year basis at the end of August 27 as against RBI’s projection of 20 per cent for the financial year. Outstanding bank credit stood at Rs 3351396 crore at the end of the fortnight.

Fuel Traders To Join Strike, Shut Pumps From Sept 20

As many as 350 petrol dealers from the city will join the nationwide indefinite strike called by the Federation of All-India Petroleum Traders (FAIPT) from September 20.

Federation vice-president Babasaheb Dhumal told a news conference here on Wednesday that the petrol dealers had been pressing their demands for the past two years and they had decided to join the strike with the government not relenting. Of the 36,500 petrol pumps in the country, the state has 3,800. In Pune, nearly 120 pumps are in city, 70 in Pimpri-Chinchwad limits and 160 in rural areas.

Petrol Dealers Association of Pune spokesperson Ali Daruwalla said the dealers were running into huge losses as they also had to cater to 25 lakh employees working in these pumps. “We have met several officials regarding our demands, but to no avail. The managing committee of FAIPT is now compelled to take a decision for the larger interest of approximately 1.75 crore people and keep the pumps shut indefinitely till the demands are accepted.”

Their demands include, among other things, increasing dealer’s margin, reciprocal system of quality checks, uniform rates of petroleum products and security at petrol pumps. Daruwalla said they had been demanding the increase in margins owing to a rise in expenses. “The minimum wages of our staff have been revised from 33 per cent to 42 per cent. Power and water tariff too have increased. When the Central government needs money, they increase excise and custom duties; the state government increased VAT/sales tax and when oil companies need money, they increase prices of fuel; we have been left out.”

He said the two per cent commission saw a loss of one per cent in evaporation of petroleum products and other costs. “One per cent is very minimal to run the petrol pump and pay the staff and electricity charges.”

The dealers also want the government to avoid giving new sanctions to petrol pumps as the new pumps were affecting the business of the existing dealers. The dealers from many states have made representations and some high courts had accepted the plea and stayed new petrol pumps. Their other demands include a proper system of quality checks, uniform rates of petroleum products and installation of CCTV cameras and other security equipment by oil companies.

Pune Real Estate: Issue of Illegal Constructions Resurfaces

The issue of illegal constructions has resurfaced on the agenda of civic bodies. Pune Municipal Commissioner Mahesh Zagade, who found out that there was only one building inspector per ward office to keep check on construction activity has decided to set up a new system for tackling the issue of illegal constructions. On the other hand in the neighbouring Pimpri-Chinchwad, 25 corporators who have constructed illegal buildings find themselves in the dock as the state government has asked Dilip Band to probe the matter and suggest necessary action.

“There is no doubt illegal construction has come up in the city in last few years. There is one building inspector for each ward office who has the responsiblity of checking the construction related activities. The person has to check construction that comes up as per the permission and also tacke action against illegal construction. It is a difficult job for one person,” said Zagade.

Zagade said the construction activity is at peak in the suburbs while very minimum in the old city area. “Thus, there is a plan to shift the manpower available to the ward office that has more construction activity from the place where there is not much work,” he added.

The municipal commissioner has directed all the zonal commissioner to prepare list of illegal constructions in their jurisdiction so that action can be initiated against them.

Realty Bubble To Escape Action

An extraordinary sharp rise in property prices and robust growth in banks’ housing loans portfolio is drawing attention of policymakers, economists and bankers said this week.

It is not clear whether the Reserve Bank of India, in its mid-quarter policy review on Thursday, will take more than cognisance of these developments that have impact on the effectiveness of its battle against inflation. Some economists believe RBI won’t impose curbs on bank credit to realty sector although housing inflation is fed by easy availability of banks loans.

Not that it has ignored this development.

Late August, the central bank’s annual report noted, “Although housing prices witnessed correction during the global financial crisis, there was a sharp rebound in the subsequent period.”

“Greater pace of rise in asset prices continued to remain a concern from the standpoint of macroeconomic management,” the report said.

Realty bubble

Rising property prices in past one year have raised fears an asset bubble may be forming in real estate sector.

Reliable data on housing prices is limited. According to Makaan.com, a website on real estate, property prices in Mumbai and Pune rose 10-14% in the year to July 31. In Delhi’s National Capital Region, prices were up 30%. An official indicator of housing prices is the consumer price index for urban non-manual employees (CPI-UNME). This puts housing inflation at 33% from a year ago in June.

The escalation in property prices “is somewhat out of sync from fundamental viewpoint”, said Abheek Barua, chief economist at HDFC Bank. In the past, RBI has increased risk-weights on banks’ loans to real estate to limit lending to the sector. RBI hiked risk-weight on advances to commercial real estate sector to 1% from 0.4% in October 9. Rating agency Crisil’s economist dismissed ideas the banking regulator would impose stricter sanctions on real estate loans in Thursday’s policy.

“Real estate prices have been on RBI’s radar for some time,” acknowledged Dharmakirti Joshi, chief economist of Crisil. But “I don’t think there will be any major changes (in real estate lending norms) on September 16,” he said, noting, “There are still downside risks to the economy.” For some, spike in home prices mirrors growth in economy, and therefore there is no need for RBI to up the ante on housing.

“I don’t think there is any bubble in property prices at this point of time,” said Madan Sabnavis, the chief economist of Credit Analysis & Research, also a credit rating agency.

“Overall, if one takes a sanguine view of the Indian economy, things are looking positive. So it is natural realty prices will also go up,” he said. “I don’t think RBI needs to act or will act immediately. But if this upswing (in property prices) persists, RBI may act accordingly,” he said.