RBI's move on home loans gets mixed reactions

The Reserve Bank of India (RBI) has made it clear to banks that from now housing loans should be linked to construction stage to protect the interests of buyers and contain the fallout of “innovative” housing financing schemes.

In a notification issued last evening, RBI said, “In view of the higher risks associated with such lumpsum disbursal of sanctioned housing loans and customer suitability issues, banks are advised that disbursal of housing loans sanctioned to individuals should be closely linked to the stages of construction of the housing project/houses.”
In this context, mortgage major HDFC Vice-Chairman and CEO Keki Mistry said that tightening home loan disbursal norms is a good move by RBI as upfront home loan disbursements brought risk to the system.  However, builders and developers have a mixed view on RBI’s move.

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