Non performing assets of Banks in India- efforts required for enhancement disposal

Hyderabad : Most of the Banks are Auctioning the non performing immovable assets under SARFEASI Act.

hyderabad, India (prHWY.com) June 19, 2012 - Y.Bhargav, Managing Partner, FORECLOSUREINDIA.COM, 16-6-2012:

Hyderabad : Most of the Banks are Auctioning the non performing immovable assets under SARFEASI Act. The efforts of Indian Banks and Housing finance institutions for disposal of Non performing assets is laudable as they are constantly improving the systematic adjustments necessary and progressing. However, the rate of success of selling of the properties through Bank Auctions is varying from around 40 % to 60 % depending on the city, market sentiment, political situations etc.
As per the observations during the last two and half years, the primary reasons for less success rate are :

1. Inappropriate reserve price: Some of the Authorized Officers are finalizing the reserve price over and above the distressed price recommended by the Govt. approved valuer. They are some times not considering the external factors like market sentiment like recession, political situations like etc, while finalizing the reserve price of the property.

2. Lack of publicity to the Auctions: To fulfill the mandatory requirements and save cost of news papers publication, some of the Banks are publishing the Auction Notices in non prominentnews papers.

3. Lack of proper facility to inspect the property in advance: Inspection of the property is being arranged a few days before the Auction date.

4. Loan facility to buy these Properties: Some of the Banks and Housing financial Institutions are not giving loans for these properties.

5. Lack of awareness among General Public: General awareness is required as they can buy the properties at very attractive prices.

6. General opinion of some of the investors are having sentiment about buying properties in Bank Auctions:
The possible remedial measures may enhancement disposal of Non performingassets .

1. Appropriate reserve price is to be fixed . Very few Banks are fixing reserve price inappropriately and subsequently they are reducing the reserve price upto 22.86 % andfor selling the non performing assets through auction or on private treaty. As an example, one of the Public sector Bank has published an advertisement stating that they are reducing the reserve price from 35.0 Lakhs to 27.00 Lakhs, i.e reducing 22.86 %.


2.Wide publicity is required like displaying of Banners, distribution of pamplets, publishing in Internet portals etc. Internet users in India are 110 millions, i.e 11 crores, as against All English news papers readers at 20 millions, i.e 2 crores. Publishing in Internet portals is damn cheap at 4 % cost of English news paper advertisement cost and it gives 25 times more publicity.

3.Inspection facility is required immediately after publishing of the Auction notice and at least on one public holidays or after office hours so that interested investors and their family members can inspect the property to take appropriate decision.

4. Banks / Financial Institutions will have to come forward to give quick loans to buy these properties to create a Vibrant Bank auctions market / Foreclosures market in India. Interested Investors must also get the sanction of Pre approved Housing loans to buy this type of properties.
5. Awareness is to be created in General about selling of Non performing assets. More than 27% of total home sales are foreclosed sales in USA, where as it may be less than 1 % in India.
6. About sentiment aspect, it is to be clearly understood that some people with out having any financial control over their expenditure are not paying the loans and they are losing their properties. These properties are Good opportunity for investment purpose and considering buying second home etcc

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Tag Words: foreclosure india, homes in foreclosures, bank auction properties, pre foreclosures listings

Categories: Real Estate

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