Apart from banks,Non-Banking Finance Companies (NBFCs) , manufacturing as well real estate companies can accept deposits from public , share holders as per provisions of Acceptance of Deposits by Companies Rules 1975.
Number of Real Estate companies are currently accepting the deposits and we will take overview of the same.
Cash flow is very important for any real estate company. Cash is required to fulfill need of working capital,operating expenses etc.This need is fulfilled by business income, loans ,by selling assets like land reserves and public deposits.
Deposits accepted by public are unsecured and rank pari pasu with unsecured liabilities…means suppose if any company went under liquidation then depositors claim on the assets of company comes at lower rank.
Selected Real Estate Companies offering Fixed Deposits:
|Company Name||Company Registered at Exchange||Min Deposit Amount||Highest Deposit Rate Offered|
|Unitech ltd||BSE / NSE||Rs.25,000/-||12%|
|Parsvnath Developers||BSE / NSE||Rs.15,000/-||12%|
|Kolte Patil Developers||BSE /NSE||Rs.20,000/-||12%|
|DSK Developers||BSE /NSE||Rs.25,000/-||12%|
Most of the companies are offering 12% (12.50% for preferred depositors like senior citizens,shareholders,Flat holders from company,company employees etc).which is higher in the range of 3-3.5% than rates offered by any nationalized bank.
Higher returns always come with risk and depositor need to understand the risks associated with any real estate company.Few major risks associated with any real estate companies are:
- Interest rate risk: Under high interest rate scenario,its difficult for property buyer as well company to raise the capital.Under high rate scenario companies can face cash crunch situation.
- Govt regulations: Govt regulations can affect the overall business of company.
- Demand – Supply scenario.
- Legal matters related to the properties as well sanctions /permissions requirements from number of departments.
Though all companies are not going to default & its not easy for any company to run away with depositors money,depositor need to take due caution while investing in deposits of any company.Its recommended that one can invest maximum 20 % of overall deposits in company deposits.Means if you have already safe deposits of 10 Lakh in nationalized bank then you can think to take risk of some money…which can not affect personal finance adversely.