Nina Varghese for IndiaProperty.com | Moneycontrol.com
Will the 2016 retrenchments in the e-commerce space impact home finance? This is a question on many minds especially in a place like Bangalore where a large number of e-commerce companies are headquartered.
In recent times there has been disturbing news in the daily broadsheets about the pink slips in the e-commerce space. Of course, as many would say this was a bubble that was waiting to burst, mainly because of the proliferation of e-commerce companies offering a variety of services and yet there has been no corresponding rise in internet penetration; in other words, an increase in net users.
In addition to this, the other bad news from the Middle East, where a large number of Indians work, is that companies are retrenching staff to combat the declining oil prices and the squeezed profit margins.
It is likely that a majority of the people who have lost their jobs this year would be paying equated monthly installments (EMIs) on homes, cars and other household items, and EMIs will be impacted.
The impact on the home loan EMI may not be immediate but it is likely in the next two quarters. This seems to be a persistent worry for the real estate sector, especially as surveys show that home sales in major metros are improving and a number of new launches are going up.
So how do you service the home loan if you have lost your job? At this point you must be aware that banks have the provision to restructure loans and that there are a number of ways to do this; all depending on the type of loan that you have taken.
The first option would be to extend the tenure of the loan; wherein your EMI reduces and makes it easier to manage. The bank, however, has to be convinced that the reason for restructuring the loan is a genuine one. The second option is foreclosure; where the borrower can sell the house which is most likely the collateral, to settle.
However, in most cities in India, the housing market is tight and it might be difficult to sell at this point. If you show undue haste, it is likely you will not get the price you desire. It is very important that you talk to the bank in question and remember that running away and defaulting on this loan and other financial commitments is not a wise choice. Most bankers understand if there is a serious issue such as a loss of employment and it is imperative that you make yourself open to them.
Let’s take a look at which companies are doling out the pink slips this year. According to newspaper reports, Flipkart, the e-retailer laid off 1000 employees pan India, in July. In September, Twitter, the online social networking services sent 20 people home, in Bangalore while OLA the online cab service sent out 700 pink slips across India, in August. ASKME’s 4000 employees lost their jobs when the company shut shop, in July, after their investor exited. GROFERS, the online grocery delivery service, laid off 150 to 200 employees and revoked 65 job offers, in September.
In the first quarter of 2017, CISCO, the e-commerce shopping list firm, is likely to lay off 14,000 people worldwide with 7000 of them likely to be engineers in the company’s Research & Development centre, in India.
According to the Middle East news service MEED, Abu Dhabi National Gas Co (ADNOC) plans to cut 5000 jobs by the end of the year while 2000 layoffs have already been announced. Similarly, many companies in the oil and gas industry in the United Arab Emirates have cut flab in a bid to reduce operational costs. The job cuts have affected mainly engineers and those on contracts. These job cuts are likely to have a domino effect on the hospitality and retail industries too.
The banking sector in the UAE has also been impacted by the declining oil prices. The Emirates Islamic, the Sharia compliant lending arm of the Emirates NBD, sacked 100 people because of the diminished growth in the second half of this year. Those laid off were mainly from the sales force.
Newspaper reports from Qatar said that many large multinational oil companies were downsizing because they were suspending or cancelling projects.
So it’s the right time to sit tight and fasten the belts tighter.
By Anita Bhoir, ET Bureau | 11 Jun, 2014, 04.00AM IST | Economic Times
MUMBAI: Gender discrimination is not a phenomenon that’s restricted to the bad lands of Uttar Pradesh, or Bihar. It is right here in the middle of the metros and that too in banks, some headed by women.
The probability of a bank insisting on a single woman being asked to bring in a co-applicant is a lot higher than a married one, especially if it is a home loan.
Karishma Amin, a 30-year old staffer in an overseas mission, is among the many people who have been running struggling to secure a home loan, but many top lenders turned her away saying that she would not be eligible unless she brings in a co-applicant.
The lenders include ICICI Bank, Axis Bank, Indiabulls Home Finance, and Dewan Housing Finance. At least two other women complained of difficulties in getting a home loan, and checks on banks showed that the practice is prevalent. “They said they won’t be able to process the application without a co-applicant,” says Amin. “Since this was a pre-condition for institutions I made my mother who is a dependant as the coapplicant. I haven’t received a convincing response from these institutions on how a non-earning member, my mother, would help their cause.”
“We do not give home loans to single women borrowers unless they have a co-applicant,” said a culture officer from a private sector bank. “There is no RBI norm, but this is an internal credit check that we follow based on our data analytics where we have noticed that the default rate among single women is high.” Most lenders may not explicitly say that a co-applicant is necessary, but could disguise it saying that it is essential to have a guarantor for loans.
“This mentality comes from the fact that women can’t get good employment options and those who do would not be able to sustain the employment,” says Vijayalakshmi Rao, mentor & advisor at Association for Non Traditional Employment for Women. But what exposes the double-standards is that hardly any working male applicant is asked for such guarantors when the property is mortgaged.
“We do not ask for a co-applicant,” said Rajesh Makkar, president and chief development officer, DHFL. “We request for a guarantor to ensure that there is a contact when the borrower is not contactable. This only helps the institution in case of a default.”
Credit information bureaus which generate credit scores on individual loan applicants do not prepare data on single women separately. Their scores are based on their past performance in terms of repayment of loans. “We do not generate any report based on the gender,” says an executive from CIBIL, a credit information bureau. “If at all there is anything, it may be done at the bank level.”
Many banks and housing finance companies sell home loan and other products to women by giving them an interest rate benefit. However, their staff are not equipped and trained to handle queries by single women.
“Most banks and financial institutions have a policy insisting that a single woman borrower having a co-applicant is to secure the loan,” says a third party sales agent of a private sector bank. “Though the flat is mortgaged with the lender they do not want to face the hassles of repossession. They prefer a co-applicant from whom they can recover.”
As against home mortgages, other loans are not as biased against single women. “Gender is not a criteria for benefit or disadvantage for a car loan pricing at HDFC Bank. However scheme/market-based limited period offers are rolled out for various segments including women from time to time,” Rajan Pental, senior executive VP & business manager, auto loans, HDFC Bank. “Since gender plays no role in our credit assessment any need for a co-applicant in a car loan is to bolster the applicant’s debt-servicing/income profile,” said Pental.
Source : http://goo.gl/iFvqq6