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.

Foreign investment limit in ARCs raised to 74%. The finance ministry said that 74% would be the combined investment limit for FDIs and FIIs

Asit Ranjan Mishra 

New Delhi: A day after allowing asset reconstruction companies (ARCs) to take equity stakes in bad assets of banks through amendment of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act in Parliament, the government on Friday raised foreign investment limit in ARCs to 74% from 49% at present.

The proposal is considered critical to boost the asset reconstruction business in India at a time when bad loans in the banking system have been on the rise in a slowing economy. Gross non-performing assets (NPAs) in the banking system were around 3.5% of the total assets at the end of the first half of this fiscal, according to government estimates. Cumulatively, banks restructured Rs.1.9 trillion of loans till September.

In a press statement, the finance ministry said 74% would be the combined limit for foreign direct investors (FDIs) and foreign institutional investors (FIIs), removing the prohibition on FIIs investing in ARCs. “The total shareholding of an individual FII shall not exceed 10% of the total paid-up capital,” it added.

A single sponsor will not be allowed to hold more than 50% of the shareholding in an ARC either by way of FDI or FII. “The foreign investment in ARCs would need to comply with the FDI policy in terms of entry route conditionality and sectoral caps,” the statement said.

S.C. Bhatia, chief executive officer of Phoenix ARC, said the move is is more of an enabler and it will take time to produce results. “Unless banks are incentivised to sell (bad loans) to ARCs, I don’t see a flood of equity coming into ARCs,” he said.

There are several regulatory restrictions imposed by the Reserve Bank of India on the source of funding that ARCs can tap. Out of the available sources, banks, notified financial institutions and non-banking financial companies do not lend much to ARCs. Another source of liquidity for ARCs could have been domestic funds, but there are a very few in India focused on distressed assets. Since foreign investors are minority shareholders at present, they don’t take an active part in the revival of assets.

Typically, ARCs set up separate trusts to acquire individual assets. These trusts issue security receipts (SRs) against the bad assets bought. The SRs are bought by banks themselves as qualified institutional buyers, or QIBs, as well as other investors. Under the current laws, banks can undertake corporate debt restructuring and convert some of the debt into equity according to prescribed guidelines. But no such option was available for asset reconstruction companies (ARCs). They acquire bad debts from banks and other lenders at a discount and then try to recover them, earning a fee.

Through the amendment of the SARFAESI Act by passing the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Bill, 2011 in Parliament, the government allowed ARCs to take equity interest in such bad debts.

The finance ministry also increased the limit of FII investment in SRs from 49% to 74%. It has also done away with the individual limit of 10% for investment of a single FII in each tranche of SRs issued by ARCs. “Such investment should be within the FII limit on corporate bonds prescribed from time to time, and sectoral caps under the extant FDI regulations should be complied with,” it added.

http://www.livemint.com/Politics/xZNSZVtOkqUHUAyHuklgwO/Foreign-investment-limit-in-ARCs-raised-to-74.html

Govt tables Amendment Bill to deal with recovery of bad loans

The government on Monday introduced an Amendment Bill in Parliament to enable banks and financial firms to effectively deal with the problem of bad loans.

The move could help bring down lending rates for home and corporate loans, experts said. Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Bill, 2011, which was introduced by minister of state for finance Namo Narain Meena in the Lok Sabha, seeks to strengthen recovery process of secured loans.

It seeks to amend the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act 2002 and Recovery of Debts due to Banks and Financial Institutions (RDBF) Act 1993.

The amendment in SARFAESI Act will "provide for conversion of any part of the debt into shares of a borrower company and such conversion shall be deemed always to have been valid as if the provisions of said conversion were in force at all material times."

Besides, it seeks to bring multi-State cooperative banks under the category of the bank.

At the same time, it will enable to increase the period of response to be sent by the banks or financial institutions to the representation of the borrowers to 15 days from 7 days.

It will also empower banks or financial institutions to accept the immovable property in full or partial satisfaction of the claims of the bank against the defaulting borrower.

The amendment will allow district magistrate or the chief metropolitan magistrate to authorise any subordinate officer to take possession of assets or forward assets to the secured creditors.

The Bill has also proposed to amend the RDBF Act 1993 that among other things would "enable the banks and financial institutions to enter into settlement or compromise with the borrowers and also to empower
Debts Recovery Tribunals to pass an order acknowledging such settlement or compromise."

It also seeks "to permit the multi State Cooperative banks, with respect to debts due before or after the commencement of the proposed legislation, to opt either to initiate proceedings under the the Multi-State Co-operative Societies Act 2002 or to initiate proceedings before the Debt Recovery Tribunal."

To ensure expeditious adjudication and recovery of dues of banks and financial institutions, remove legal anomalies and strengthen the Recovery Tribunal, the RDBF Act was amended in the years 1995, 2000 and 2004, the Bill said.

"Once the Bill is cleared, procedural changes in loan recovery is expected to lower the cost of funds for borrowers," Ernst & Young partner Ashvin Parekh said, adding that risk premium on secured loans will soften.

Banks may be allowed to accept immovable property to settle claims

The Hindu - Business Line  New Delhi, Dec 12: 

Banks and financial institutions may soon be allowed to accept immovable property in full or partial satisfaction of claims against defaulting borrowers. A proposal to this effect has been made in a new Bill introduced in Lok Sabha on Monday to amend the existing Sarfaesi law.

Currently, banks are not empowered to accept immovable property in full or partial satisfaction of the claim against the defaulting borrower, if no bidder comes to bid or banks are unable to find a buyer for such assets. Banks, as secured creditors, are, however, permitted to sell the securities to realise the defaulted loans.

This Bill — The Enforcement of Security Interest and Recovery of Debt Laws (Amendment) Bill 2011 — was introduced by Mr Namo Narain Meena, Minister of State for Finance.

It provides for mandatory registration of all securitisation, reconstruction and creation of security interest transactions in the Central registry. All such transactions that are subsisting on or before the establishment of the Central registry will also have to be registered, the Bill has said.

The Bill would also enable securitisation firms to convert any part of debt into shares of the borrowing company. At present, reconstruction or securitisation firms cannot convert their debt into equity in cases of business reconstruction, rehabilitation or revival.

Another significant proposal relates to allowing multi-state co-operative banks to initiate proceedings through debt recovery tribunals (DRTs). Also, banks or any person will soon be empowered to file a caveat so that before granting any stay, they are heard by the DRT.

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (Sarfaesi) was enacted to regulate securitisation and reconstruction of financial assets and enforcement of security interest.

Finance ministry pushes banks to fast-track bad loan recovery

Sangita Mehta, ET Bureau Dec 12, 2011, 01.30am IST

MUMBAI: The finance ministry is pushing capital-strapped public sector banks to hasten recovery of bad loans to improve health, and has promised to fill vacancies at debt recovery tribunals (DRT) across the nation, partly responsible for inordinate delays in ending disputes.

"Needless to say that Rs2 lakh crore (of bad loans) are a drag on the capital of banks," a bureaucrat from the finance ministry wrote to bank chairmen recently.