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Builders & Real Estate Bulls Theory Proved Wrong

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Builders & Real Estate Bulls Theory Proved Wrong

Last updated: November 1 2016
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  • Re : Builders & Real Estate Bulls Theory Proved Wrong

    Originally posted by vaibav123 View Post
    Banks have highly qualified staff who analyse and study the loan proposals.They are eminently qualified to assess the profile of the person,type and nature of business and micro and macro factors which will enable the business to succeed and repay loans.
    They have a monitoring system which sees loan refunds,analyses delay in monthly repayments and sound alerts in case of failure to repay and stress development in particular industry/entity which has taken loan.
    After this if a loan becomes bad and irrecoverable it is funny and fishy to a great extent.
    Management of banks is under pressure to sanction loans to certain people,write off loans and such pressure are mounted by political decisions and bosses.
    I am sure that our bankers would not be so inefficient to allow NPAS to rise this alarmingly.How much can the bank write off?
    How much of the loans of this nature be window dressed?
    Government ought to allow banks to run on commercial lines and loans only based on business sense.Banks should be free to recover loans and seek dissolution of company if they are not repaying obligations.
    Decision should be purely commercial.
    We cannot allow the NPAs to mount like this for a stable banking system.
    Our FDs which are thought to be safe investments may become less safe if such things go on unchecked.
    .
    I know one type of case in which a safe debtor can turn into an NPA - a few of my friends who are MBAs and working in manufacturing/automobile sector in Pune, at 13+ lacs salary lost their jobs 4 months back. While most of them are still hunting for jobs, one has opted to do a PHD. If these ppl had bought flats, they would have been NPAs today. It's not the bank's wrong assessment in this case rite?

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    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      ""I know one type of case in which a safe debtor can turn into an NPA - a few of my friends who are MBAs and working in manufacturing/automobile sector in Pune, at 13+ lacs salary lost their jobs 4 months back. While most of them are still hunting for jobs, one has opted to do a PHD. If these ppl had bought flats, they would have been NPAs today. It's not the bank's wrong assessment in this case rite?""
      Bank will have the security of property mortgaged to them.It may not turn out into NPA. Percentage of home loans becoming NPA will be less.But when you dont vet a business prosal well enough,dont monitor cash flow into their accounts and refund of laons in time.,then loan can become an NPA.
      Timely monitoring,strict evaluation of credit limits is mandatory.Banks have well established systems,guidelines and following them would prevent this type of huge NPAs being faced by banking sector.

      Comment


      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        +1

        Spoke to a branch manager of my bank about NPAs.

        Asked whether they had some npa assets i would be interested in.

        He said very casually not at all. Surprized?

        Me too. But then he explained that its their policy to:
        1. Wait for 6 to 7 months default.
        2. In between the debtor manages some portion of the dues.
        3. They give them some more relief of time.
        4. This is bcoz the bank does not want the headache of selling the property.
        5. They ask the debtor to directly dispose of the property with payment reflecting in bank's account only.
        6.As long as the bank dues are cleared the bank is least bothered about the methods.
        7. All this bcoz the bank does not want to sell the property at 60 to 70% discount of market rates which obviously would happen in free and transparent auction.

        Now this is quote-unquote.

        Not adding my gyaan to it further simply bcoz i am tired of all thus stupid world economics.




        Originally posted by vaibav123 View Post
        ""I know one type of case in which a safe debtor can turn into an NPA - a few of my friends who are MBAs and working in manufacturing/automobile sector in Pune, at 13+ lacs salary lost their jobs 4 months back. While most of them are still hunting for jobs, one has opted to do a PHD. If these ppl had bought flats, they would have been NPAs today. It's not the bank's wrong assessment in this case rite?""
        Bank will have the security of property mortgaged to them.It may not turn out into NPA. Percentage of home loans becoming NPA will be less.But when you dont vet a business prosal well enough,dont monitor cash flow into their accounts and refund of laons in time.,then loan can become an NPA.
        Timely monitoring,strict evaluation of credit limits is mandatory.Banks have well established systems,guidelines and following them would prevent this type of huge NPAs being faced by banking sector.

        Comment


        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          Originally posted by kudoz8922 View Post
          I know one type of case in which a safe debtor can turn into an NPA - a few of my friends who are MBAs and working in manufacturing/automobile sector in Pune, at 13+ lacs salary lost their jobs 4 months back. While most of them are still hunting for jobs, one has opted to do a PHD. If these ppl had bought flats, they would have been NPAs today. It's not the bank's wrong assessment in this case rite?
          You are correct. It is not possible to predict these events. In fact this will not turn into an NPA yet because prices have not yet crashed.

          But this will become an NPA under the following conditions ...

          - Job market declines sharply and many people lose jobs or face reduced income
          - This leads to many properties on loan coming to market in distress
          - this results in sharp drop in liquidity as well as price (real distress prices, not the 10-15% being discussed today)

          The problem with businesses is, they are under pressure to be way too optimistic because of target pressure and their salaries depend on it. Thus they get carried away and resort to bending of standards and norms to achieve the extra bit. When enough of this happens in the market, one day the tide withdraws and shows who has been swimming nanga.

          Back in the 2008-2010 period many couples having $150k combined salaries have com down to nothing due to massive job market collapse. As Mango would say, we have not even started on that slide and we better hope that slide does not start. Otherwise there will be mayhem in all market for a while.

          It all hinges on the job market!

          cheers

          Comment


          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            ""they are under pressure to be way too optimistic because of target pressure and their salaries depend on it. Thus they get carried away and resort to bending of standards and norms to achieve the extra bit. When enough of this happens in the market, one day the tide withdraws and shows who has been swimming nanga""
            Increase in burnout cases among private sector executives is on the increase.
            I had posted a link from TOI on the subject which is must read for hotshot executives who aggressively do/try to compete..

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            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              As Sales Slow, India Developers Offering Deals

              Property developers in India have launched a slew of incentives ranging from free holidays to Bali to cars during the country's festive season in a bid to attract home buyers in a slow market.

              Property prices have come under pressure in India amid high interest rates, a slowing economy and unsold stock of homes in major cities in India. Twenty-two out of the 26 cities covered in a recent survey experienced falls in home prices between April and June compared to the previous quarter, according to data from the National Housing Bank.

              "This year, the residential real estate markets are slow in many cities, and are reaching a stage where only hard discounts will achieve any significant extra momentum," said Anuj Puri, the chairman and country head of Jones Lang LaSalle India. "Freebies and schemes are the last line of approach for many developers - if these don't work, they will have to mark down their prices to catalyze more sales."

              As Sales Slow, India Developers Offering Deals - WORLD PROPERTY CHANNEL Global News Center
              If you are happy, you are successful.

              Comment


              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                Everybody in India feels we are rich due to spending power due to IT.BPO/KPO.

                But companies which are not loyal to US citizens , how will they be loyal to indians?

                Indians will face reality dose in 10 years , when outsourcing stops

                God help india middle class living on expense of US middle class
                \
                http://www.alternet.org/comments/eco...#disqus_thread

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                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  Prices of residential property in Mumbai drop nearly 10% over the past three quarters - The Economic Times

                  Residential property prices in some south and central Mumbai locations such as Parel, Lower Parel and Mahalaxmi have declined nearly 10% over the previous three quarters with the increase in the number of unsold homes and prospective buyers reluctant to exceed budgets amid a slump, said property consultancy Knight Frank India.

                  Developers have been open to negotiation, especially in the premium segment, reducing prices up to 25% for a sizeable upfront payment. Prices in Navi Mumbai, Thane and the peripheral suburbs of central and western Mumbai have either been stable or have trended marginally upward, said the consultant.

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                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    One post per day?

                    The bubble finally bursts and nobody is screaming I told you so????

                    Or has the finality of the burst silenced all arguments - because there is nothing to argue, the bubble is bursting and will continue to burst for a while.
                    Venky (Please read watch a or before posting)

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                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      Originally posted by Venkytalks View Post
                      One post per day?

                      The bubble finally bursts and nobody is screaming I told you so????

                      Or has the finality of the burst silenced all arguments - because there is nothing to argue, the bubble is bursting and will continue to burst for a while.
                      Effect is visible on the forum.
                      Haven't seen compuwalah trademark posts since couple of months
                      And RA is being ferociously bashed/cornered by bulls for everything he posts

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