'Need to develop housing finance database'

Central bank official says RBI should establish links with MCA database to improve their coverage of corporate statistics

The Reserve Bank of India (RBI) sees the need for developing a database on housing finance.

“Keeping in view the demand-supply gap, our favourable demography, increasing urbanisation and growth prospects, the demand for housing finance will continue to grow. At the same time risks also arise to household and bank balance sheets with fluctuation in prices and changes in the business cycle. Hence, there is a need for developing a data base on housing finance,” said Deepak Mohanty, executive director, RBI in Mumbai.

According to Mohanty availability of statistics on housing finance has been limited.

“We have two publicly available house price indices (HPIs) namely National Housing Bank-Residex compiled on survey based information for 20 cities, and RBI-HPI based on registration prices information for 9 cities. However, to assess the impact of house prices on the broader economy such information as loan to value (LTV) ratio, equated monthly instalment (EMI) to income ratio, price to income ratio, borrowers’ characteristics and other important attributes of the property dealings becomes important,” he said.

Mohanty also said that recently his department in RBI has launched a new statistical survey to capture such information based on housing loan transaction as available with banks and housing finance companies (HFCs). “I hope this survey can be placed in public domain quickly after it is examined by our technical advisory committee on surveys,” said Mohanty.

According to Mohanty the requirement of disaggregated granular banking data on a more frequent basis for policy and research has increased. Mohanty believes that on the part of the banks, implementation of core banking solution has created the potential for banks to provide granular data electronically, both for statistical and supervisory purposes, directly from their source systems.

“It is important for reporting entities to adopt straight through processing without manual intervention so as to maintain data integrity. This will also help rationalisation of various returns thereby reducing the reporting burden on banks,” said Mohanty.

Mohanty is of the view that RBI should establish links with Ministry of Corporate Affairs (MCA) database to improve their coverage of corporate statistics.

“RBI is compiling data on corporate finance such as production, sales and profitability. These data are also used to generate corporate saving and investment at the national level. From a financial stability perspective, the corporate balance sheet data are important for assessing risk parameters such as leverage and unhedged foreign currency borrowings.

Corporate performance data is also important to understand the micro foundation of pricing power and hence inflation dynamics. There is, therefore, a need to expand our sample size and the coverage of financial details,” he said.