Indian Accounting Research Analyst, Trudence Capital Advisors

Nitin Mangal

Nitin Mangal is a Research Analyst with more than 15 years of experience in Indian equities. He is Pioneer of Corporate Governance and Accounting Research in Indian Market and has successfully developed product for Institutional Investors named as "Analysis Beyond Consensus" during his association with Edelweiss Securities Ltd, Mumbai. Later during the career, he has worked with Veritas Investment Research Corporation, Canada as Asia Consultant covering Indian and US equities. He has been profiled by leading financial newspapers such as Wall Street Journal, Business Standard etc

Indian Accounting Research Analyst

Thematic (Sector/Industry)

India Financials / Thematic (Sector/Industry)

In one of our previous reports  <a href="https://www.smartkarma.com/insights/three-gorges-could-damn-indian-banks" target="_blank" data-smartkarma-citation="insights:18506" rel="noopener">Three Gorges Could Damn Indian Banks</a> , we highlighted certain innovations that the real estate developers come up with to negate the duress. One of the routes was through the Proxy Investors/Profiles (PIs). This route led to the idea of what is known as the interest subvention schemes, where the buyer pays a small payment upfront and the remaining amount gets disbursed to the developer who in turn takes the responsibility of the interest obligations till the project completion.However on 22nd July the National Housing Bank articulated a directive to the Housing Finance Companies (HFCs) asking them to curb such interest subvention schemes. The prime reason for this act of desisting is to prevent and control the fraudulent practices which often take place especially when there are delays in construction. As a result, the NHB further strictly said that the disbursements should be in accordance to the construction stage and no upfront disbursements should be made in incomplete projects. The directive also calls for a stricter monitoring by the HFCs of the construction progress of the real estate projects.

In one of our previous reports  Three Gorges Could Damn Indian Banks , we highlighted certain innovations that the real estate developers come up with to negate the duress. One of the routes was through the Proxy Investors/Profiles (PIs). This route led to the idea of what is known as the interest subvention schemes, where the buyer pays a small payment upfront and the remaining amount gets disbursed to the developer who in turn takes the responsibility of the interest obligations till the project completion.However on 22nd July the National Housing Bank articulated a directive to the Housing Finance Companies (HFCs) asking them to curb such interest subvention schemes. The prime reason for this act of desisting is to prevent and control the fraudulent practices which often take place especially when there are delays in construction. As a result, the NHB further strictly said that the disbursements should be in accordance to the construction stage and no upfront disbursements should be made in incomplete projects. The directive also calls for a stricter monitoring by the HFCs of the construction progress of the real estate projects.

Interest Subvention Schemes: Loss Of Morale