National Waqf Development Corporation Limited (Nawadco)
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NATIONAL WAQF DEVELOPMENT CORPORATION LIMITED (NAWADCO) BROCHURE-CUM-GUIDELINES ON BUSINESS MODELS FOR DEVELOPMENT OF WAQF PROPERTIES Government of India Ministry of Minority Affairs 20th July, 2020 1 20.07.2020 CONTENTS Cl.No. Particulars Page No. 1.0 Background & Objectives of the Company 3 1.8 Synergy with Waqf institutions & progress 4 thereupon 2.0 Proposed Business Plans 5 2.1 Self-sustaining Model (by appointing 5 Developer) 2.2 Joint-Venture Model 5 2.3 NAWADCO as Financer-cum-Consultant 6 Model 3 Details related to Financer-Cum- 6 Consultant Model 3.0 Mode of Application 6 3.1 Processing of Application & Disbursal of 7 Financial support 3.2 Exclusive Escrow Account & Monitoring of 7 Approved Projects 3.3 Time for Completion of Project 9 3.4 Terms of Repayment of Financial Assistance 9 3.5 No Deviation in Project Execution 9 3.6 Utilization of Additional Income accruing from 9 the Project 3.7 Removal of Difficulties 10 3.8 Dispute Resolution 10 2 20.07.2020 MODELS FOR DEVELOPMENT OF WAQF PROPERTIES BY NAWADCO* 1.0 Background and Objectives of the Company 1.1 Waqf Properties (Auqafs) are permanent dedication of movable or immovable properties by any person for purposes recognized by the Muslim Law as pious, religious or charitable. Apart from their religious aspect, the Waqfs (Auqafs) are also instruments of social good as the benefits accrue to the needy in social-economic and educational fields. 1.2 For varied reasons, the majority of Waqfs (Auqafs) in the country have limited income. The result is that generally the Mutawallis (Managers of Auqafs) find it difficult to adequately fulfill the purposes for which these Auqafs are created or intended. Most of the urban Waqf lands have the potential for development but the Mutawallis and even the Waqf Boards are not in a position to muster enough resources for construction of modern functional buildings on these lands. 1.3 India has the largest Waqf land in the world. There are about 4.9 lakh registered Waqf properties comprising of about 6 lakh acres of land having approximate market value of Rs.1.20 lakh crores. The Waqf properties have potential of generating an annual income of Rs.12,000 crore if properly developed. (Source: Sachar Committee, 2006). 1.4 Hence, National Waqf Development Corporation Limited (NAWADCO), was established under the aegis of Union Ministry of Minority Affairs on 31st December, 2013 under the Companies Act 1956 (Corporate Identity Number, CIN- U74999DL2013GOI262924), with mandate :- (i) To act as a specialized financial and developmental institution to develop and provide financial services for the development of waqf properties, identify, develop and implement projects directly or indirectly for commercial viability in order to enhance the income of waqf or achieving their objectives in the country by entering into Joint Venture or together with Mutawallis, Waqf Boards, Trusts and Associations, registered under the Waqf Act based on preparedness of the Waqf institutions under different development models. (ii) To arrange financial assistance independently or in association with any person, Government or any other agency whether incorporated or in the form of advances, equity, refinance or in any other form to the Waqf institution preferably on the Islamic Sharia principle. 1.5 Capital Structure of The Company: Total Authorized Share Capital of NAWADCO is Rs.500 crores and approved Paid-up Equity Share Capital is Rs.100 crores. *Subject to modifications 3 20.07.2020 Share Capital structure of NAWADCO is as under: S. No. Name of Entity Group % Contribution 1. Central Waqf Council (CWC) A 9% 2. National Minorities Development and Finance B 49% Corporation (NMDFC) 3. Waqf institutions and/ or General Public including C 42% body corporates 1.6 Since inception, NAWADCO has been pursuing Waqf institutions and Mutawallis directly or through State Waqf Boards to motivate them to offer the unutilized Waqf land parcels in urban areas for development into institutional/ commercial complexes. The senior officials have visited the Waqf sites across India as a result of which many Waqf properties have been identified for development. After collecting data from respective Waqf Board/ Waqf Institutions/ Central Waqf Council (CWC), more Waqf Properties would be identified as having potential for development. 1.7 Appointment of Transaction Advisers and Feasibility Study conducted:- The company has empaneled reputed real estate consultants such as M/s JLL, Knight Frank, PwC, Deloitte, etc. for commercial development of Waqf properties to provide Transaction Advisory services. In the past few years NAWADCO utilized the services of such consultants and got prepared Feasibility/ Valuation Reports for waqf properties in the States of Andhra Pradesh, Karnataka, Bihar, Haryana, Rajasthan. Feasibility Reports have also been shared with respective State Governments & their Waqf Boards. 1.8 Synergy with Waqf institutions & Progress thereupon:- (a) NAWADCO had signed Agreements with Karnataka State Board of Waqfs to develop three (3) Waqf properties in Bengaluru. They have been persuaded to obtain necessary statutory clearances from the State Govt. of Karnataka and review the business model adopted for development, if need be. During “Study Tour Program” of Standing Committee of Parliament held on 20.01.2020 at Bengaluru and the State Govt of Karnataka has assured to get properties developed through NAWADCO when their elected Waqf Board is in position. (b) Agreement for commercial development of one (1) property at Panipat was signed between the Haryana Waqf Board and NAWADCO in February, 2019. On this land parcel, feasibility study was carried out through JLL & the report was shared with them. The finalization of suitable business model is in process wherein beside Developer model, an alternative business model has also been suggested to the Waqf Board in which NAWADCO can provide financial assistance for the development of waqf property. 4 20.07.2020 (c) Rajasthan Board of Muslim Waqfs has been persuaded to execute Project specific Agreement for undertaking development of their waqf properties at Jaipur & Kota for which the feasibility study has already been conducted & shared with their State Govt too. The efforts are continuing to take up projects in other states also. 2.0 PROPOSED BUSINESS PLANS:- 2.1 Self-Sustaining Model (By appointing Developer) In this model, it is intended to select Developer(s)/Concessionaire(s) who is prepared to develop the waqf property commercially on a lease period of 30 years & handover the built-up spaces back to the Waqf institutions after expiry of lease tenure. The prospective Developer(s) will be asked to quote the maximum possible revenue which they would offer in lieu of our proposal and shall be selected after following transparent bidding process. The Developer will pay rentals on regular interval or fixed amount, upfront, or a mix of it periodically, as agreed with Waqf institution. To ensure transparency and to derive optimal benefit to the Waqf institutions, services of Transaction Adviser for documentation, drafting agreements, bidder qualifications etc. would be availed. It is envisaged that the prospective developer shall incur all costs charges and expenses towards the development and shall generally be responsible for undertaking the development of the waqf property as per agreed Terms of Reference duly vetted by the Waqf institutions/Board. Although we have to overcome the administrative restraints to comply with the requirements of the extant Waqf Act & Lease Rules while undertaking developmental works, but the self-sustaining nature of this model allows for a long-term stability. 2.2 Joint Venture Model In this Joint-Venture Model, the land parcel shall work as equity from the Waqf institutions and the funds for construction of building and marketing purposes etc. shall be contributed by the agencies like Mutawallis, State Waqf Boards, Central Waqf Council, Trusts, and NAWADCO or any other third party interested in financing the projects by charging reasonable amount of return. The Implementing Agency for execution of construction work would be the PSUs involved in construction of projects related activities like NBCC, NPCC etc. with which NAWADCO will enter into MoUs for developing the waqf projects. This Implementing Agency will work from concept to completion till handing over, all construction hazards and answerability towards labour department, CVC & disputes etc. shall rest with this agency. If agreed, the work of post-construction maintenance may also be assigned to such agencies. The revenue generated by leasing of built-up spaces upto 30 years may then be allocated in proportion of investment of respective agencies through proper financial analysis with a provision to open & maintain a pre-decided Escrow account for the purpose. This model increases the bargaining power of NAWADCO as facilitator and higher magnitude of 5 20.07.2020 revenue could be realized by leasing-out units of built-up spaces of the complete building structure as per market demand/trend rather than leasing the property on upfront revenue basis. 2.3 NAWADCO as Financer-Cum-Consultant Model In this model, the Waqf institution may consider to build-up the waqf land parcel themselves, by deploying their own funds and also with financial assistance, not the Grant-in-Aid, obtained from NAWADCO on the mutually devised terms & conditions. NAWADCO would extend financial assistance to State Waqf Boards/ Waqf institutions for development of commercially viable projects approved by NAWADCO. The amount of financial assistance is to be decided based on feasibility reports of the projects proposed by the Waqf institution itself. These projects may involve construction or reconstruction of commercially and economically viable projects on the Waqf land to build infrastructure like Commercial Complexes, Shopping Complexes, Marriage Halls, Banquet Halls, Hospitals, Schools, Colleges, Cold Storage, Warehouse etc. In lieu of providing financial assistance, NAWADCO would charge reasonable amount of return beside nominal Consultancy Fees depending upon size of the project and payable at the time of release of loan instalments.