The National Housing Bank (NHB) has stated that housing finance companies advised to desist from offering loan products involving servicing of the loan dues by builders/ developers etc. on behalf of the borrowers. The prevalent products of HFCs, if any, should also be reviewed on the above lines. It is clarified that the stipulation shall also be effected in cases wherein the HFC is yet to commence disbursements under the sanctioned cases. Instances of frauds having been allegedly committed by certain builders using subvention schemes have also been brought to the notice of the NHB, a latest circular said.
HFCs should have in place a well-defined mechanism for effective monitoring of the progress of construction of housing projects and obtaining consent of the borrower(s) prior to release of payments to the builder/developer. Merely obtaining borrower consent and release of funds by the company without linkage to the stage of construction will be seen as dereliction of duty of the HFC. For housing projects sponsored by government bodies, HFCs may disburse housing loans according to payment stages prescribed by authorities, provided such authorities have no past history of non-completion of projects.
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