The Delhi Development Authority (DDA), which has invited applications for sale of about 5,000 flats in the city, will earn at least Rs 4.5 lakh per flat as interest on the money it collects as refundable registration fee.
The seven banks, acting as agents to the scheme, are expected to rake in about Rs 250 crore by financing the applications.
The DDA is sitting on a corpus of over Rs 9,000 crore collected from more than 600,000 applicants who have submitted their forms along with the application fee of Rs 1.5 lakh.
The corpus is expected to swell considerably by September 16, the last date for submission of the forms. This money will remain with the DDA for three months — the approximate time the authority will take for the allotment of the flats through a computerised draw.
If the authority earns an interest of 10 per cent on this corpus for three months before refunding the money to the unsuccessful applicants, it would be richer by at least Rs 225 crore.
This translates into an extra earning of at least Rs 4.5 lakh per flat as interest on the registration amount, which is parked with the banks that are collecting the applications. If the rate of interest is 9 per cent, the DDA will earn an extra profit of around Rs 4 lakh per flat.
The DDA plans to use this money to buy land for low-income group housing schemes. “That’s the model we follow. The money from the registration fees will be used to buy land to build houses for low-income groups,” said DDA spokesperson Nimo Dhar.
The DDA has put freehold flats in various localities on sale. Aimed at catering to the aam aadmi, the flats are priced much below the market rates, creating a huge rush of applicants. The lower price tags are a result of the fact that the DDA is a not-for-profit developer. “We are a no-profit-no-loss organisation,” the spokesperson added.
Ramesh S Singh, additional general manager of Central Bank of India, one of the seven banks acting as nodal agencies for the housing scheme, says the response has been tremendous.
“Real estate prices are shooting up and many people find it beyond their means to buy residences built by private players. For this section, especially the middle class, DDA flats are the best option.” Singh says this time people are showing more interest in the scheme than in a similar scheme in 2004.
The scheme comes at a time housing loans have become expensive as a result of the central bank raising the repo rate and the cash-reserve ratio to control inflation. As premium flats have become even more dearer, more and more people are trying their luck in this category.
The huge demand has turned into a risk-free business opportunity for the seven banks — State Bank of India, Central Bank of India, Union Bank of India, IDBI Bank, ICICI Bank, HDFC Bank and Axis Bank — that are collecting the applications and the registration amount.
