About four years ago, Id written about advertising from real estate returns that promised fairly high assured returns to those who bought into their projects. The returns were in the region of 12 to 15 per cent and the word used in the advertising was guarantee.
In India, for financial products, its practically impossible for anyone but the government to legally offer guaranteed or assured returns. Even public sector bank deposits are not guaranteed in theory, although in practice they probably are. However, real estate developers seem to be immune to these laws.
Now, one Delhi-based developer has sharply upped the ante on the kind of returns that can be offered. In hoardings that have appeared over the last few days, this developer offers 32 per cent returns. The ad doesnt use the word guaranteed or assured. Its in Hindi and the word used is pakka, which means the same thing idiomatically.
32 per cent is quite amazing--Im quite sure that such returns--or anything remotely close to it--have been never been offered for any legitimate financial product. Of course the hoarding is not written as if for a financial product. Ostensibly, its for real estate but that is clearly a sham. It mentions no characteristic of the real estate thats on offer, only the financial returns from owning it. Clearly, these developers are benefitting from the absence of the long-awaited real estate developer, which is one reform that the new government seems to have forgotten about.
Recently, SEBI has been armed with enhanced powers to detect and shut down illegal financial schemes. Logically, it should be able to deal with financial products that are disguised as non-financial ones. Its not as if this is a new concept--weve seen everything from teak plantations to emu farming. Its worth remembering that much of Saradhas deposits were also supposed to be down payments for apartments--essentially, a deposit in the garb of real estate.
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