Housing loans: With banks being conservative, govt looks at NBFCs

Bengaluru: Thousands of beneficiaries under various government housing programmes are not getting loans with banks insisting on creditworthiness among other stringent checks, forcing top authorities to look at non-banking financial companies (NBFC) even if that means a higher interest rate. 

A top official in the housing department slammed nationalised banks for not lending loans to beneficiaries belonging to the economically-weaker section (EWS), especially those in the slums.

“Banks are citing CIBIL and other reasons to deny loans. For 2,000 applications, loans are disbursed to only 20,” the official said.

The government has started talking to a few NBFCs willing to give loans to beneficiaries.

“While nationalised banks charge an interest at the rate of 8.5 per cent, NBFCs levy 11 per cent. But they don’t insist on things like CIBIL score,” the official explained, citing the example of how Andhra Pradesh has already signed an agreement with one NBFC for housing loans.

The biggest downside to this is that the beneficiary will have to bear the cost of the higher rate of interest. 

According to Principal Secretary (Housing) Naveen Raj Singh, it is for the first time the government is looking to bring NBFCs on board as banks are playing truant.

Housing Minister B Z Zameer Ahmed Khan said most beneficiaries are poor and lack the means to provide mortgage or collateral. He said he is speaking to a few lenders and a couple of them have agreed to work with the Rajiv Gandhi Housing Corporation Ltd (RGHCL). The issue of lending to housing beneficiaries has come up repeatedly at the State Level Bankers’ Committee (SLBC) meetings, including the one held last week.

In February this year, the RGHCL told banks that 52,154 applications were pending. However, banks have accused the government of “data inconsistency”.

In March, banks were informed that only 3,390 houses are ready or nearing completion, so priority must be given to those beneficiaries. Out of 3,390, details of 2,413 beneficiaries were shared. In August, the RGHCL informed lenders that only 641 houses were ready with Khatas for registration.

“One of the things we’re hoping to do is to streamline and reduce the time taken to process, sanction and disburse a loan by simplifying the process. We’re developing an end-to-end application for this,” Additional Chief Secretary-cum-Development Commissioner Uma Mahadevan told DH.

Singh added that the end-to-end software application is being developed expressly to address banks’ grouse with data. “It’ll be ready in a month’s time,” he said.