Real estate regulator Bill will see light of the day soon; it is in the interest of all stakeholders: R V Verma

Interview with CMD, National Housing Bank

The Central Registry of Securitisation Asset Reconstruction & Security Interest of India (CERSAI) portal would be open to the public by mid-June, says R V Verma, chairman and managing director of National Housing Bank (NHB), a shareholding bank in CERSAI. In an interview with Neelasri Barman, he says the portal would provide a seamless payment gateway system and enable checks on information related to the properties that would be transacted. Edited excerpts:

The Union Cabinet has deferred a decision on the real estate regulator Bill. When can it be expected?
It's only a matter of time, as this is a critical need and would serve the larger interests of consumers and aid transparency in the sector. This would, in turn, have a number of positive implications, including a large flow of funds, better credit availability and lower risks. These would result in more efficient and transparent pricing and enhanced confidence among lending institutions. It would be akin to reforms in the real sector (supply side), which has lagged sectors such as finance. We are optimistic the Bill would see the light of the day soon, as it is in the interests of all stakeholders.

Earlier, you had said disbursements in 2013-14 would be better than in 2011-12. Which factors would contribute to the disbursement growth?

Yes, that's right. We would be closing the year ending June 30 (NHB follows the July-June financial year) with the highest-ever disbursement for the bank in a single year-about Rs 18,000 crore. Recently, NHB had crossed an important milestone-total refinance of Rs 1 lakh crore. The home loan market, for primary lending institutions (PLIs), as well as NHB, has seen robust and sustained growth. For PLIs, 2012-13 saw growth of 19 per cent, which is likely to remain so, if not improve in 2013-14. NHB's refinance schemes cover a wide spectrum of lending by PLIs. NHB is also supported by the government and the Reserve Bank of India (RBI), in terms of allocation of resources (Rs 6,000 crore under the Rural Housing Fund and Rs 2,000 crore under the Urban Housing Fund for 2013-14). This helps us expand our operations and extend support to PLIs in lending to under-served market segments. Besides, NHB's thrust on low and moderate income housing has given us a low average loan size (in terms of refinance)---Rs 9-10 lakh. NHB is also encouraging lending in niche areas such as energy-efficient residential housing projects and solar water heating & solar lighting equipment for domestic use, in line with the government's thrust on encouraging energy conservation, energy efficiency and use of alternative renewable energy sources. We see growing passion among the people for green and clean energy environment, including in rural areas.

How successful has CERSAI been, in terms of preventing fraudulent transactions in real estate?
In about just two years starting operations, CERSAI has developed into an important source of information and data on transactions related to equitable mortgages. The central registry, or the CERSAI portal, has about 8.4 million transactions on its platform, which is being actively visited by banks, housing finance institutions and other lending agencies under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act. These include subsisting mortgages, as well as new ones, created after CERSAI was set up.

It is encouraging to receive positive and valuable feedback on the usefulness of the portal and the quality of data. As data on the CERSAI portal provides the status of encumbrance or creation of charge on a particular underlying property, lenders visiting the portal can avoid creating a second charge or lending against the same property, through misrepresentation by the borrower. The portal also updates the charge once the loan is fully amortised. While this helps prevent multiple lending against the same property at the individual transaction level, the CERSAI portal also mitigates the risk at the sector level. We have connected CERSAI with major credit bureaus in the country, through the CERSAI portal.

An important message underlying this integration is credit risk emanating from frauds, misrepresentation and credit profiles of borrowers has to be mitigated through an organised and integrated system of information, one that is quick, reliable and cost effective. We are planning to open the CERSAI portal to public view by mid-June. We are working to provide a seamless payment gateway system for the individual members of the public to enter the site and check information relating to properties they would be transacting.

You plan to raise Rs 14,000 crore this financial year. Would this include a tax-free bond issue?
Yes, we believe there a good appetite for tax-free bonds among retail investors. This requires a great deal of time and planning. I feel a little more aggressive marketing, with more realistic and competitive pricing, can whet the appetite of institutional investors, as well, banks, financial institutions and companies.

How much did you raise through your term deposit scheme last financial year? Considering interest rates are headed south, do you plan to revise rates this financial year?
Frankly, term deposits form a very small part of our resources, but help us remain connected with the retail depositor community. We have not aggressively pursuing our retail deposits, but there is good potential; we will take measured steps in this direction.

We keep a close watch on our cost of funds, as also the prevailing interest rate regime and the outlook, to take a view on our resource profile and lending rates. As a development finance institution, NHB operates on thin margins.