Views on NHB circular attributed to Ramesh Nair, CEO & Country Head, JLL India

New Delhi, July 25, 2019: The National Housing Bank (NHB) has advised housing finance companies (HFCs) to desist from providing loans to finance subvention schemes offered by builders to sell homes, according to a circular issued by the Regulator. RBI had issued similar advise to scheduled commercial banks in 2013 against upfront disbursal of housing loans, but this caution was not taken up seriously at that time. As per estimates, share of loans under subvention scheme is nearly 30-35% of the total loans and has been driving the residential home sales until now. A large section of homebuyers have been attracted due to lower down payment under this scheme, but construction delays have led to buyers preferring near completion projects. But the caution and subsequent discontinuation of such schemes, if it happens, will have modest impact due the already evolving buyer behaviour. The step ta ken up by the NHB is, however, laudable. But the advisory’s impact will depend if NHB exercises its powers in this regards in coming days. As per recent budget announcement the shifting of regulation of HFCs to RBI will lead to wait and watch attitude by HFCs until further clarification.

Corporate Comm India (CCI Newswire)