According to CARE Ratings, the National Housing Bank's (NHB) recent directives on interest subvention products is likely to have an impact on the sales velocity of the developers and the loan book growth of the housing finance companies (HFCs) is likely to be affected with a dip in sales. According to CARE, to increase their loan book, the HFCs would now have to guard against reintroduction of this scheme in any other manner. It added that the scheme has been a practice for years, wherein the developers are funded for a relatively shorter period on the basis of the borrower's credit record. The scheme aims to increase sales of residential properties as the developer is able attract home-buyers by offering subvention on the interest. In its directives, NHB has advised HFCs to desist from offering loan products involving servicing of the loan dues by builders/developers on behalf of the borrowers. The bank clarified that it continues to receive several complaints in relation to housing loan products involving subvention schemes offered by builders / developers. Further, instances of frauds that were allegedly committed by certain builders using subvention schemes have also been brought to its notice.
📅Published on:
24 July 2019
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