HDFC Bank provides Rs 500 crore funding to Jewar Airport project – ET RealEstate

HDFC Bank has entered into an agreement to provide Rs 500 crore funding to the upcoming Jewar airport in Greater Noida. The funds will be utilized for infrastructure development and land acquisition for the proposed airport that will be Asia’s largest. The funding will be provided at interest cost of Marginal cost of funds based lending rate (MCLR) plus 1%.

With this the Yamuna Expressway Authority that is developing the 5,000-acre airport in Gautam Budh Nagar district of western Uttar Pradesh has secured financial assistance worth over Rs 4,500 crore including a funding from Housing & Urban Development Corporation (HUDCO).

The tenure of HDFC’s loan is five years, and the funding amount can be increased later.

The project is estimated to cost over Rs 29,500 crore and the authority is looking to raise additional funds through issuance of infrastructure bonds soon.

“The HDFC funding is not linked to our future cash flows and that allows us more flexibility in terms of further fund raising. We are planning to raise between Rs 20,000 crore and Rs 25,000 crore through infrastructure bonds,” Arun Vir Singh, CEO, Yamuna Expressway Authority, told ET while confirming the story. “We have achieved the financial closure for the project’s first phase.”

The airport is billed to be the biggest in India with six runways upon completion. The first phase of the project will be spread over an area of 1,334 hectare and is expected to cost over Rs 4,500 crore. The construction work at the project is expected to start in 2021, while commencement of operations is scheduled for beginning of 2024.

ET’s email query to HDFC Bank remained unanswered until the time of going to press.

In July, the authority and HUDCO entered into a pact for financial assistance worth over Rs 4,000 crore for various projects adjoining the upcoming International Airport. These would include land acquisition and associated infrastructure development on both sides of the Yamuna expressway over the next three years. HUDCO has extended the financial support at the MCLR rate.

The Noida International Airport Ltd (NIAL), part of Yamuna Expressway Authority, has entered into an agreement with Swiss developer Zurich Airport International for the development of this airport. A concession agreement has also been inked between Uttar Pradesh government’s agency and the Yamuna International Airport Private Ltd, a special purpose vehicle floated by the Zurich Airport for the project.

The authority is planning to develop an Aerotropolis around the project including several industry-specific hubs such as pharmaceuticals, small and medium enterprises (SMEs), handcraft and a film city.



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HDFC, other banks want landlords to reduce rent – ET RealEstate

MUMBAI: Recently a landlord who has rented out his four-storeyed building to HDFC Bank’s regional office in Indore received a rent cheque from the bank which was 20 per cent less than the usual amount. The landlord had no choice but to accept this as he was not sure if he would be able to get another client who could occupy all four floors of the building.

According to market sources, HDFC Bank has written a letter to landlords, whose premises it occupies for branches and other offices, seeking a 20 per cent cut in the rent and otherwise it has expressed its inability to continue to occupy the premises. In 2019-20, the bank spent Rs 1,658.47 crore on rent, electricity and local taxes. This is Rs 176.37 crore more than the previous financial year. HDFC Bank has 5,416 branches across the country and 14,901 ATMs.

A banking sector analyst who did not wish to be named said, “Typically for banks, the third largest expenditure is on rentals after the expenditure on employee salaries and other benefits and IT infrastructure.” The analyst also said that HDFC Bank is not the only bank which is looking for reduction in rentals due to the Covid-19 pandemic and lockdown. Recently ICICI Bank also wrote to landlords asking for reduction of rent for the lockdown period. ICICI Bank has around 5,300 branches and 15,000 ATMs across the country and spent Rs 1,200 crore in financial year 2019-20 on rent, electricity and taxes.

According to Propstack, a real estate data analytics firm, the top seven private sector Indian banks – ICICI Bank, HDFC Bank, Axis Bank, IndusInd Bank, Kotak Mahindra Bank, RBL Bank and IDFC First Bank – paid rent of around Rs 4,000 crore in financial year 2019-20. And all these banks are looking at reducing their annual outgo towards rent by 15-20 per cent, said a banking sector analyst.

A senior HDFC Bank executive said, “We are in negotiations with landlords for reduction of rentals but denied that, the bank has unilaterally informed landlords that it is reducing their rent by 20% and it will walk out if they don’t agree. The rent agreement is a legal contract, no one can dictate terms unilaterally,” he said. However, an email sent to the HDFC Bank spokesperson for official comment remained unanswered till the time of going to press.

An industry source said that apart from up the rent cut, Yes Bank has also sought smaller office spaces for its branches, looking at the Covid-19 scenario and shifting emphasis on online banking transactions. “In most cases, the banks have been successful in negotiating this arrangement with individual landlords and getting 15 to 20 per cent discount in metro cities,” the official said.

From the landlord’s point of view, banks are good long-term customers who rent properties on 10, 15 or even 20-year leases, and have secure cashflows. The other option for these mostly ground floor properties is retailers, a segment that has been badly hit by the pandemic lockdowns.

“Bank branches are considered as a stable and long-term tenant, as they tend to occupy premises for a long duration thereby resulting in a steady and predictable rental income. By providing some rental discount in lieu of an extended tenure or lock-in commitment, property owners can avoid creating vacancy risk as well as lack of income in their portfolio,” said Karan Singh Sodi, regional managing director of property consultant firm JLL India.



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HDFC Bank cuts MCLR by 10 bps across tenors – ET RealEstate

MUMBAI: HDFC Bank has reduced its marginal cost of funds-based lending rates (MCLR) by 10 basis points across all tenors with effect from Friday.

According to the HDFC Bank website, post the rate cut, the overnight MCLR stands at 7 per cent, the one month tenor stands at 7.05 per cent while the three-month MCLR is 7.10 per cent.

The MCLRs for six months, one year and two years stand at 7.20 per cent, 7.35 per cent and 7.45 per cent, respectively.

The development comes a day after the Reserve Bank of India (RBI) announced to keep the repo rate and the reverse repo rate unchanged.

Banks generally review MCLRs every month. ICICI Bank recently announced to reduce its MCLR by 10 bps across tenors with effect from August 1.

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