Dhruva Jyoti Chowdhury, Kolkata, India From The India Street Securities and Exchange Board of India (SEBI), the market regulator in the country is pretty serious about clamping down on manipulation by the Indian Real estate players inflating their land banks to boost value and is unfazed by concerns that new disclosure norms will keep realty companies from tapping the market. While addressing a seminar recently at the Tamil Nadu’s Investor’s Association, the SEBI Chairman M Damodaran opined “I believe if that is the case then they should not be there in the first place,” SEBI recently tightened disclosure norms for real estate companies that want to raise money by selling shares. As per the norms, companies are allowed only to show land that they own, not the land they intend to buy in the future. Moreover, the valuations have to be based on the current market value and not on future projections. If this is materialized, the actual land acquisition will be known by the Government which will help to re- locate the land which had not been aquired by the real estate company. Damodaran also spoke on the extent to which land banks were manipulated and said the market regulator won’t allow the practice to continue anymore. Some real estate companies are inflating land bank values ahead of a public offer of shares by temporarily acquiring land from farmers for a fee and then returning the land to them after the public issue is launched, Damodaran said. He said the farmers are paid a meager amount for signing the documents. “The first set of documents is what is made available when you build up the land bank and having raised your money, the second set of documents becomes effective. That is, on non-existent landbank you would have parted with money,” Damodaran said. It must be mentioned here that as much as Rs 4,000 crore out of a total of Rs 20,000 crore raised through share issuances last year was by real estate developers. That pace has slowed so far this year as several initial public

offerings, including that of Purvankara Projects Ltd, DLF Ltd and Omaxe Ltd, have yet to be cleared by the stock market regulator. Even the Central Government has pulled up its socks to check malpractices in the realty sector. Recently the Finance Ministry issued a statement intending to curb demand in overheated sectors such as housing and real estate. "The intention is to constraint demand in those sectors where there are signs of what you call overheating and example of that could be real estate and housing. I think in these sectors there is reduction in demand," finance minister P Chidambaram said. On the impact of the RBI's measures to tighten money supply in these sectors, he said these steps work with a time lag and it might take time to have its impact on the intended sectors. However, in other sectors there was no intention to reduce demand, Chidambaram said. Furthermore, the ASSOCHAM is also playing a key role to stop malpractices by the Real Estate companies. In a recent move, the ASSOCHAM has decided to work like a watchdog over the real estate advertisements. In an effort to curb the Real Estate advertisements aimed at enticing the buyer often exaggerate or at times misrepresent reality, the Associated Chambers of Commerce and Industry of India (ASSOCHAM) has decided to propose a monitoring committee to oversee real estate advertisements. So that the prospective buyers can get only the relevant information needed and not the exaggerated one. The monitoring committee, apart from scrutinizing the advertisements may pay surprise visit to the locations where the buildings are coming up. The buyers are pretty happy with the decision as often seen, the companies to woo its sales, tend to lose the ethics of the trade and make false declarations in the advertisements. The Indian realty sector has also paid the price for this. Often the customers move to court against these false promises made. ===================