Banks to get tough on Housing loans

Banks will now have to check whether a housing loan is being sought for an authorised structure and seek an undertaking that construction is being done in accordance with the sanctioned building plan.

They have also been asked to ensure that the sanctioned building plan is attached with such an undertaking. These directives from the Reserve Bank of India (RBI) to banks are a follow-up to an order of the Delhi High Court. "Banks are advised to strictly comply with the directions with immediate effect," the regulator told banks through a circular.

The RBI listed the detailed directives of the high court, which banks have to follow while considering applications for home loans.

In case of an application for a housing loan for building construction, banks need to obtain a copy of the sanctioned plan from the competent authority in the name of the person applying for such credit facility and also seek an affidavit-cum-undertaking that the borrower shall not violate the sanctioned plan.

For a housing loan for purchase of constructed property/built-up property, banks are required to obtain from the applicant a declaration that the built-up property has been constructed in accordance with the sanctioned plan and/or building bye-laws.