HUDA to rake in Rs 600 crore interest from applications

More than 20 lakh forms expected to be sold before March 22

The new residential scheme offered by the Haryana Urban Development Authority (HUDA) has turned beneficial for the banks that are financing it. HUDA is also expected to rake in about Rs 600 crore from the interest it will earn from the earnest money, in addition to about Rs 10 crore from the sale of forms.

Industry experts said the number of forms bought is expected to cross 20 lakh by the end of the March 22 deadline. Each form costs Rs 50.

Sources said more than 15 lakh applications have already been sold. The scheme was floated in January for over 5200 freehold residential plots in Panipat, Palwal, Panchkula, Bahadurgarh, Hisar and Sonipat.

HUDA officials said maximum rush is for Panchkula, Panipat and Hisar, as 40 per cent of the plots fall in these cities. HUDA has approved seven public and private banks for the collection and other financial matters.

B P Chopra, general manager, Haryana zone, Punjab National Bank, said, "PNB has acted as a marketing partner for HUDA. It is because of the people friendly, scheme that the people have been applying. As for the benefits are concerned, these are just one time. Moreover, this would give the banks an opportunity for cross selling."

Sources said the draw of lots and the allotment process could take up to six months, for which time period HUDA will earn the interest from the money collected.

Investors only need to pay the interest on the initial deposit that HUDA is asking for calculated for six months. This ranges from Rs 2,500 to Rs 21,000, and banks will pay the deposit to HUDA.

Anil Kumar, vice-president of UTI Bank's Sector 34 branch in Chandigarh, said UTI Bank was the first one to start this scheme of 100 per cent financing. "We have financed about 6,000 applications amounting to Rs 60-70 crore from this branch alone. Overall the bank has financed about Rs 700-800 crore in this scheme," he said.

G K Garg, chief manager, Bank of Baroda's Sector 17 branch, Chandigarh, said, "The bank has financed around 8,000 applications, amounting to over Rs 70 crore so far, in Haryana and Delhi. We expect the figure to touch 10,000 applications by the time the scheme closes. Our customers have increased due to this scheme. Earlier, we were financing 90 per cent of the total earnest amount, but seeing the potential, we have raised it to 100 per cent financing."

Deepak Malhotra, a Chandigarh-based property dealer, said, "The scheme comes as an opportunity for the middle class to own a house. For example, an applicant has to deposit only Rs 6,500 for a 10-marla plot, while the HUDA booking amount for a plot of similar size is Rs 1,24,982. This big difference in deposit amount is attracting people to the scheme. If successful, the applicant deposits the remaining earnest money to the bank within the stipulated time. The successful applicant has the advantage of selling the plot at more than five times the HUDA price."

"As for HUDA, it will earn more than Rs 600 crore from the interest on the earnest money. The amount is based on calculation taking an average of Rs 100,000 as earnest money by 15 lakh applicants. The interest has been taken at the rate of 8 per cent for half year duration." he added.