On Saturday, property buyers will have an interesting opportunity to buy houses, factories or commercial plots in an e-auction of 300 properties, a first of its kind, by State Bank of India (SBI).
The auction is being conducted for the country’s largest bank by Ahmedabad-based Auction Tiger, and properties are listed on the magicbricks.com website. “While we have been selling properties regularly, we felt the benefit was going only to a few.
Since the price is slightly less than the market price, we felt a mega auction would help in better price discovery. Also, these sales will be entirely through cheque transaction,” said P K Malhotra, deputy managing director, stressed assets group, SBI.
For those willing to do some groundwork and settle for a property that might not be in mint condition, buying a resale one in an auction can be quite profitable. For instance, a flat in Kemps Corner, Mumbai is listed at Rs.38,265/sq.ft on magicbricks under the auction. Although it is difficult to ascertain the market value of a resale property, experts said this price seemed low for South Mumbai, where prices can rise to Rs.50,000/sqft or higher.
Which is why the biggest advantage of buying a property through an auction is that buyers can sometimes get a good price. And, for a property which might otherwise not be available for sale.Procedure, issues.Before an auction, a bank first lists the properties it wishes to sell on its website and other websites if it has any tie-ups. Bidders are given time to inspect the site and check the condition.
Once they have shortlisted the property, they have to pay the earnest money deposit through a demand draft or NEFT/RTGS. Payment through cheque is not allowed. SBI has fixed the equated monthly instalment at 10 per cent of the reserve price. The bank is also offering loans for buying these properties in cases where it is possible. According to the SBI website, bidders must have a valid digital certificate with e-auction login ID and password to be able to participate.
You can get a digital certificate from companies like e-Mudhra by presenting documents for identity and address proof. The certificate helps to confirm the bidder’s identity. It is mandatory for some e-auctions. The advantage of an e-auction over a regular offline one is that buyers can do the bidding in the comfort of their home or office.
The process is more transparent and quicker. It also allows the seller, the bank in this case, to reach a wider audience. The bank has listed the requirements, such as the internet speed, the kind of browser required and so on.An hour has been allotted for the bidding. When you log in, you can see the competitive bids placed by other bidders but cannot see the bidders. You can revise your price accordingly.
Since these are properties mortgaged with the bank, many are in prime locations, where supply is limited.And, since the bank is conducting the auction, the legal issues and documentation are taken care of.Buyers can take help from experts, such as the local real estate broker, to get an idea of the prices in that area before a bid.
Ahead It is tough in that buyers have to put up reserve money upfront and get digital signatures but a mega auction’s purpose is also to gather feedback from bidders. Going ahead, the bank might hold auctions for specific classes of properties, such as home, commercial or industrial.
With non-banking financial companies (NBFCs) being allowed to use the Sarfaesi Act (for repossession in case of loan defaults), there could be more such properties coming for auctions in the future. “NBFCs have already started talking to us and we expect them to put up properties for auction, too,” said JayeshChaudhary, director, marketing and corporate affairs, Auction Tiger
SBI set to auction Kingfisher House
Enthused by the good response to its mega auction of Rs.1,200 crore worth of properties belonging to defaulters, the State Bank of India is planning to put Kingfisher House on the block in the next round of e-auction.
The bank on Friday put on the block 300 industrial and residential properties across the country which it had attached from defaulters in a bid to recover bad debts.Until now, SBI used to sell assets of defaulters on a piecemeal basis.
As a result, the response was also localized and most of the response came from a select group of people who specialized in purchasing stressed assets at a discount.
Now with the economy turning around, the bank hopes that investors from across the country will be drawn to the mega auction and there will be a genuine price discovery based on demand and supply.
“It was too early for us to include Kingfisher House in this auction and we plan to include this during the next auction.We want a good business house to buy it rather than have a reseller come in.
Our valuation of this was quite dated and we are doing a fresh valuation, which is expected to be through in a couple of days,” said P K Malhotra, deputy managing director, SBI.
Friday’s auction included residential units and industrial plots across the country.While there was a good response to the residential properties, SBI expects some work on the larger industrial plots.”We are expecting to get over 10-15% (over the asking price).
Some of the industrial properties are very good with all the infrastructure available.It is like a ‘plug and play’ asset for any entrepreneur,” said Malhotra.
The sale of the assets is expected to add a few hundred crores to SBI’s bottom line for the third quarter as successful bidders have to make full payment by March 29.
The extent of profits would depend on the level of provisions made by the bank.If the asset has been fully written off, the entire realizations would add to the bank’s bottom line.
Donates Mobile Medicare
State Bank of India, Corporate Accounts Group Branch, Ballard Estate, Mumbai conducted a donation function under SBI’s Corporate Social Responsibility and donated 2 Mobile Medicare Units(MMU) to HelpAge India. Shri P. Pradeep Kumar, Managing Director & Group Executive, (Corporate Banking) of the Bank, handed over the keys of the MMUs to Shri Prakash Borgaonkar, Director of HelpAge India, Mumbai.
The donation function was attended by the all the branch staff led by Shri C.S. Setty, General Manager & Regional Head. Mr. MangalMorwal, DGM & Chief Operating Officer of the Branch welcomed the participants.The MMUs are equipped with Glucometer, Stethoscope, BP Apparatus, Weighing Machine, and Laptop with printer-cum-scanner etc. which will facilitate medical help to Senior Citizens on the spot.Shri P. Pradeep Kumar stated while addressing the Senior Citizens present in the function that SBI conducts such activity regularly as its social responsibility and SBI draws delight to extend helping hand to HelpAge India
SBI Chairman Comments
On the decision to increase FDI limit in insurance sector, Arundhati Bhattacharya, Chairman, State Bank of India, said, “With financial inclusion proceedings in full force, the timing of increase in limit for FDI in insurance sector is a blessing in disguise. In our estimate, the FDI limit hike in insurance could result in immediate inflow of around Rs.20,000crore.FDI hike in insurance is de jure increase in FDI limits for pension sector also.”