Foreclosureindia.Com Started E Auction Services For all Banks In India Thru BankAuctions.IN Portal

According to Ministry of Finance, Government of India directives,  All NPA’s shall be sold through E Auction only.  Free foreclosure listing service provider, Foreclosureindia.com  has started secured portal BankAuctions.IN for providing E auction services to all Banks, DRT’s to sell NPA’s online. 

Foreclosureindia.com is the one and only website in India listing the auction properties of all the banks and financial institutions across India since Nov 2009. It's the first of its kind internet portal that helps the buyers of property in getting the free access to all auction property details / free foreclosure listings information of banks and financial institutions happening in and around 34 major cities of the country. During the last one year it has achieved its mile stone about visitors and page views. The details are reported as detailed below.

No of total visits to the site             - 1,343,374

No of unique visitors                       - 652,724

Total number of page views          -10,458,830

Returning visitors                            - 52.05 %

Visitors came from                           - 45554 cities & from 212 countries.

        Average viewer ship of each auction property listed is 485.  Foreclosureindia.com has set a target of 100 % growth during the present financial year. 

The advantages of  “e – publicity”  through it are explained as detailed below.

1. Free access to all visitors, unlike some portals is charging Rs 1050 to 2500 per month to show the auction property details.
2. E mail alerts are being sent to 49000 plus registered users on daily basis.
3. It is displaying the Auction properties details in two other real estate websites also, along with displaying in their portal.

           According to Ministry of Finance, Government ofIndia directives All auctions of immovable properties, under 'The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002,  shall be carried out through E Auction only to ensure a free, fair and transparent process.

            E – Auctions may eliminate cartelization and facilitates NRI’s to buy properties online.  Foreclosureindia.com’s spokesperson informed that “they have developed a fully secured online portal for E-Auctions as  https://www.BankAuctions.IN. The complete process from Creation of Events, submission of first round quotes by bidders, evaluation and final auction will be done online to enable transparency in transactions, strictly adhering to all the requirements of Ministry of Finance.  https://www.BankAuctions.IN has easy interface to enable all the investors / bidders with little knowledge of Computer and internet to participate in these property auctions. It maintains complete confidentiality & privacy for the bidders and Banks.

        All the Debt recovery tribunals are conducting E Auctions to sell secured assets.  A good number of Banks have adapted to E auctions for selling of some of the NPA’s. Foreclosureindia.com has started secured portal BankAuctions.IN for providing E auction services to all Banks, DRT’s to sell NPA’s online to Indian Public and non resident Indians working in different countries.

        The State Bank of Hyderabad, ChaitanyaGodavari Grameena Bank, Guntur and Andhra Pradesh Grameena Vikas Bank, Warangal has empaneled BankAuctions.IN for conducting E Auctions. More than 10 public sector Banks & private sector Banks are processing their empanelment requests for conducting E auctions.  It targets to conduct 6000 E Auctions of NPA’s during this year.

The advantages of conducting E auctions through BankAuction.IN are explained as detailed below.

1. Success rate of selling of properties will be more, as BankAuctions.IN is providing wide publicity to NPA properties.  Others are only conducting E auction.
2. Price for conducting E  auction is lowest when compared to all other service providers.
3. Non performing assets disposal is the only exclusive activity for BankAuctions.IN, where as it is non core activity for other E Auction service providers.

ForeclosureIndia.com requests the Banks, DRT’s , Housing finance companies, State Finance corporations, all other Organizations disposing of non performing assets under SARFAESI Act & DRT acts to utilize their e publicity and also their E auction facilities.

A reconstruction boom?

For the first time, that there exists a legislative framework that allows ARCs to focus on revival and reconstruction.
Haseeb A. Drabu .

By allowing asset reconstruction companies (ARCs) to convert a company’s debt into equity, the framework of management of non-performing assets is likely to undergo a fundamental change.

Amendments to the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI) that allow these changes can potentially alter the landscape of asset reconstruction.

Till now, banks and lenders in general had access and recourse only to the assets of the borrowers. The debt of a company was directly linked to the physical assets created by it. Equity was kept out of these arrangements unless it was specifically earmarked or borrowed against. It was not available for recovery of overdue debts.

With the new amendment passed by both Houses of Parliament, debt and equity have been made fungible as far as recovery from defaulting companies is concerned. ARCs have been given complete and unbridled access to the equity of a defaulting company. With no restrictions on it, either in terms of size or type, this amounts to powers of changing the ownership and, with that, the management and leveraging not just of financial equity but also the business, brand and other types of equity of a company. This has enormous implications not only for lenders and borrowers but the entire financial architecture of the economy.

The biggest problem for ARCs was their ability to extract value from assets. Apart from all the litigation, procedural problems and unreal pricing of impaired assets by banks, ARCs often face a situation where the value of the asset is lower than that of the debt of the defaulting company. In such a case, the enterprise value of a company is less than its asset value. As such, ARCs can’t make much from the assets that they buy.

Despite a situation where the rate of growth of non-performing assets (NPAs) has been higher than the rate of growth of credit and the consequent high levels of NPAs, ARCs have been asset-starved for the past two years. No wonder then that despite permitting the formation of securitization companies and asset reconstruction companies in 2003, the market for impaired assets in India is far from developed.

Even though a number of ARCs have been set up that have been purchasing NPAs from banks, they haven’t been able to develop a robust stressed asset market or an active distress and restructured debt paper market in India. At best, ARCs have functioned as asset-recovery centres that are primarily into asset stripping rather than asset reconstruction and business revival.

This amendment which gives them recourse to equity has the potential to trigger the development of a healthy market for non-performing and impaired assets. The move seems to have been timed well. It comes at a point when the gross non-performing assets of the banking system are at a decadal high and are likely to be around 4% of the gross advances at the end of this fiscal. If one adds restructured assets, one-time exemptions and evergreen ones, the level is almost twice as much. Seen from a stressed asset market perspective, it is a business worth Rs 5 trillion.

If private equity participants—globally there are specialist distressed asset private equity firms—can team up with local ARCs, this can be a great business opportunity. Not only that, it will also be a systemic gain as their ability to turn around companies will be much higher as India seems to be nearing the end of the downturn. This is an ideal time for investments in distressed assets. From next year, interest rates will start declining and as and when growth picks up, the pricing of these assets will improve faster than their prospects of revival.

At the transactional level, the ability to convert debt into equity will be especially useful as it will reduce interest costs for companies. This is a frequent reason for firms getting into default. In addition to this, reconstruction and revival becomes easier with innovative and quick structuring of the debt component.

These possibilities, including those of changing owners, promoters or managements, will enable ARCs to offer better packages to banks for bad loans.

Now, for the first time there exists a legislative framework that allows ARCs to focus on revival and reconstruction. The efforts will be, or rather should now be, on buying an impaired asset based on business viability, using specialized skills and tools to turn it around and then reselling the stake the moment the company recovers. Apart from making profits for themselves, ARCs will have contributed to the national economy by preventing capital waste.

Haseeb A. Drabu is an economist, and writes on monetary and macroeconomic matters from the perspective of policy and practice. Comments are welcome at haseeb@livemint.com. To read Haseeb A. Drabu’s earlier columns,go towww.livemint.com/methodandmanner-

http://www.livemint.com/Opinion/bsS1xllKPFzCj95WqqoSxN/A-reconstruction-boom.html

Bank auction buyers cannot file writ petitions seeking refund: HC

MOHAMED IMRANULLAH S.

Dismisses case seeking refund of Rs. 4.25 lakh from Canara Bank

Purchasers of immovable properties in auctions conducted by nationalised banks cannot file writ petitions seeking refund of their money, on account of certain encumbrances in the properties, as such transactions are purely commercial in nature, the Madras High Court Bench here has held.

Justice K. Chandru passed the ruling while dismissing a writ petition filed by an individual seeking a direction to the Chief Manager of Canara Bank, Melur Branch, Tuticorin, to refund Rs. 4.25 lakh with interest from November 8, 2011, as the property he purchased could not be registered in his name.

According to the petitioner, E. Muthuraj of Tuticorin, he purchased 10.107 cents of land at Sankaraperi village through an auction conducted by the bank. He paid the entire sale consideration to the bank and also obtained a sale certificate issued in his favour.

Subsequently, when he attempted to register the property in his name, the Sub-Registrar concerned informed the writ petitioner that the property actually belonged to the government and no sale deed could be registered with respect to it in favour of a third party.

An application made by him under the Right to Information Act, 2005, to the District Registrar Office revealed that the land was part of Boodhan Movement, initiated by Acharya Vinoba Bhave in 1950s for the benefit of landless poor, and it stood in the name of the State government’s Boodhan Board.

However, in a counter affidavit filed by the bank through its counsel C. Jawahar Ravindran, it was stated that the property was taken charge of under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act from one of its loan defaulters.

When the property documents were submitted as security by the borrower, the bank’s panel of legal experts had opined that the mortgagor had a valid title over it. Stating that the bank was unaware of the encumbrance, it rejected any kind of liability to repay the amount to the auction purchaser.

Further, the bank relied upon Rule 15 (3) of the Tamil Nadu Boodhan Yagna Rules, 1959, which permits mortgaging of property belonging to Boodhan Board. It also pointed out that the sale certificate issued in favour of the purchaser was exempted from being registered under the Registration Act.

After recording the contentions put forth by the petitioner as well as the bank, Mr. Justice Chandru recalled that in a judgement passed on September 12, a Division Bench of the High Court had held that it was the purchasers who must be diligent enough in enquiring about the encumbrances before purchasing properties through bank auctions.

Pointing out that statutory rules provide for sale of a property only after 30 days of a public notice issued by banks, the Division Bench said that the time was intended to serve two purposes:

One for the bank’s loan defaulter to gather resources and repay the money if possible and another for all intending purchasers to make sufficient enquiries as a person of normal diligence and ordinary prudence would do while buying an immovable property.

http://www.thehindu.com/news/cities/Madurai/bank-auction-buyers-cannot-file-writ-petitions-seeking-refund-hc/article4105979.ece

Take over of Management of An Engineering Institute.

Yerneni Bhargav, Managing Partner, Foreclosureindia.com


Hyderabad :  SARFEASI Act ,section 13 (4) (b) specifies that " Take over the management of the business of the Borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset: One of the Public sector Bank has issued a Lease /Sale Notice for Take over of the Management of an Engineering Institute. The notice is published below for information.

      All the Borrowers of the Banks and Financial Institutions shall be vigilant about their loans to safe guard their management control of their businesses.