NHB decision on subvention scheme won't have significant impact on business growth: HDFC

Mortgage lender HDFC Ltd on Tuesday said the NHB's direction to housing finance companies (HFCs) to desist from providing loans under subvention scheme will not have "significant impact" on growth of its business as the company's exposure is less than 2 per cent of individual loans through this route.

HDFC said the company collects the amount due from the developers upfront as a precautionary measure.

On Monday, the National Housing Bank (NHB) asked HFCs to "desist" from offering loans under subvention scheme wherein real estate developers pay pre-EMIs on behalf of home buyers for a certain agreed period.

The direction was issued by the NHB in view of several complaints of frauds allegedly committed by certain builders using subvention schemes.

In a regulatory filing, HDFC said it has received several queries regarding the circular issued by the NHB on July 19 to all registered HFCs on disbursement of housing loan to individuals under the subvention scheme.

HDFC said its "exposure to housing loan products involving subvention schemes offered by developers is negligible, at less than 2 per cent of the individual loans. As a precautionary measure, in such cases, the amount due from the developer is collected upfront by the corporation".

The company said "there is unlikely to be any significant impact on growth of its individual business due to the (NHB) circular".

In the case of under-construction properties, HDFC said that as a policy, the company disburses loans to individuals based on the stage of construction.

It has adequate mechanisms for monitoring the progress of construction of housing projects and customer consent is obtained prior to the release of each stage of payment to the developer.