CCI rejects complaint against Indiabulls Housing Finance

Fair trade regulator CCI has rejected a complaint of unfair business practices made against Indiabulls Housing Finance with regard to allegedly abusive terms in a mortgage loan agreement.
Rejecting the complaint, the watchdog said Indiabulls "does not possess the ability to operate independently of the competitive forces" in the relevant market.
The complaint, filed by rating agency Onicra Credit Rating Agency of India, alleged that the company abused its dominant position by imposing a pre-payment penalty for pre-mature foreclosure of the mortgage loan taken by it.
Further, the complaint alleged that Indiabulls levied hefty foreclosure rate which amounts to imposition of unfair conditions.

To ascertain whether competition norms were violated, Competition Commission of India (CCI) considered "provision of loan against property in India," as the relevant market.
Fragmented with the presence of a large number of banks and non-banking financial institutions, among others, CCI said "there exists sufficient rivalry in the relevant market and the opposite party (Indiabulls) does not possess the ability to operate independently of the competitive forces".

With regard to anti-competitive practices, the regulator, after noting the market scenario, said it "does not see any appreciable adverse effect on competition caused by the pre-payment penalty clause in the mortgage loan agreement".

"No prima facie case of contravention of the provisions of Section 3 of the Act is made out against the opposite party," it added.
While Section 3 of the Competition Act pertains to anti-competitive practices, Section 4 relates to abuse of dominant position.