Key Developments since last meeting
of Chief Executives of HFCs
Department of Regulation & Supervision
April 20, 2012
1
Presentation Outline
1. Notifications Issued
2. Circulars Issued
3. Caution Advices Issued
4. HFCs – Key Statistics
5. Grievance Redressal System
6. Multiple Financing – A Brief Case Study
2
Notification issued under NHB Act, 1987
•
No. NHB.HFC.DIR.4/CMD/2012 dated 19th
January, 2012 :
Definition of Public Deposit, Commercial Real Estate
Provisioning requirement, Modification in HFC:DIR-I,
etc.- Amendment of HFCs (NHB) Directions, 2010
A. Definition of Public Deposit – Commercial Paper Exclusion
B. Provisioning requirement – 1% on total outstanding loan amount
for Standard Assets in respect of Commercial Real Estate
C. Amendment in HFC:DIR- Schedule-I
3
Policy Circular No.41 dt. 26-09-2011
Disclosure in the Balance Sheet
• HFCs have been advised to distinctly indicate under
separate heads of account for housing and nonhousing finance business and individually for each
type of asset in the Balance Sheet as under:
(a) Provisions for sub standard, doubtful and loss assets;
and
(b) Provisions for depreciation in investments.
• Bank has also provided the illustrative list of loans
with the Circular for enabling the classification of
housing and non housing loans.
4
Policy Circulars No.42 dt. 11-10-2011 &
47 dt. 29-03-2012
List of Terrorist Individuals/Organizations –
under UNSCR 1267 (1999) and 1988 & 1989 (2011)
on Taliban/AL-Quaida Organization
All HFCs are required to update the list of List of
Terrorist Individuals/ Organizations under UNSCR
1267 (1999) and 1822 (2008) on Taliban/Al-Qaida
Organization.
5
Policy Circulars No.43 dt. 19-10-2011 &
48 dt. 04-04-2012
Pre-payment penalty on pre-closure of housing loans
• It was advised that pre-payment levy or pre-closure charges
should not be levied by the HFCs with immediate effect on
the borrowers – Where the housing loan is on floating interest rate basis
(pre-closed through any source).
– Where the housing loan is on fixed interest rate basis (preclosed by the borrowers out of their own sources).
The expression “own sources” for this purpose means any
source other than by borrowing from a bank/HFC/NBFC
and/ or a financial institution.
• Recently, Bank vide its Circular dated April 4, 2012 clarified
that the instruction applicable to fixed interest rate housing
loans referred to in the Circular No 43 shall apply to housing
loans given on Special Rate basis.
6
Policy Circulars No.44 dt. 19-10-2011 &
46 dt. 23-02-2012
Uniformity in charging interest (floating rate basis) for
old and new customers
• Bank had vide its Circular No. 44 advised the HFCs to ensure
uniformity in rates, on floating rate basis, charged to their old
and new customers, with the same risk profile etc.
• Bank has reviewed the position and clarified vide Circular
No. 46 as follows:
– Earlier instructions are mandatory and applies to all
Housing Loans disbursed on or after 19-10-2011
– HFCs should complete Risk profiling of customers by 3004-2012, and convey the same to borrowers.
– existing customers as on the date of Circular dated 19-102011, the matter is under Bank’s examination.
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Policy Circular No.49 dt. 09-04-2012
Computation of Loan to Value (LTV) Ratio
Bank has advised HFCs to compute the LTV
ratio as a percentage with total outstanding in
the account (viz, “principal + accrued interest +
other charges pertaining to the loan” without
any netting) in the numerator and the realizable
value of the residential property mortgaged to
the HFC in the denominator.
8
Miscellaneous Circular No.7 dt. 03-01-2012
Grievance Redressal Mechanism in HFCs
• Bank has advised that every HFC should put in place a
complaint and grievance redressal mechanism in each of its
offices, publicize it and also make it available on its web-site.
• Further, Bank has also advised HFCs to ensure that all
disputes are heard and disposed off in a time bound manner
and to clearly display in all offices/branches and on their web
sites that in case the complainant does not receive response
from the company within reasonable time or is dissatisfied
with the response received, the complainant may approach
the National Housing Bank.
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Caution Advice Nos. 20 dt. 30-12-2011 &
21 dt.16-03-2012
• During the period under review, caution advices
no. 20 and 21 were issued by the Bank covering
approx. 332 number of fraudulent transactions.
• Soft copy of Caution Advices can also be
downloaded from Bank’s website.
• The HFCs are required to submit information on
fraudulent transaction to NHB on regular basis.
HFCs may circulate the caution advice to all their
branches for keeping them informed regarding
various modus operandi of housing loan frauds.
10
Work-shop cum Training Programme on
Central Forms Repository (CFR) System
• Bank has arranged work-shop cum training
programme on Central Form of Repository (online submission of returns)on 23-12-2011 at its
Head office in Delhi.
• Provided CDs to participants, having Manual
and Guidance Note
11
Certificate of Registration (CoR)
under Section 29A of the NHB Act, 1987
• Bank has granted Certificate of Registration to
Milestone Home Finance Company Private
Limited having its registered office in Mumbai
• Bank has cancelled the Certificate of Registration
of Haware’s Housing Development Finance
Corporation Ltd.
12
Outstanding Loans, Public Deposits,
Total Borrowings & NNPAs of HFCs
Rs. in crore
Details
Housing Loans
Non Housing Loans
Total Loans
Public Deposits
Total Borrowings
NNPAs
Outstanding as at end
of 31.03.2011
Outstanding as at end
of 29.2.2012
1,86,442
2,17,296
61,343
73,412
2,47,785
2,90,708
28,694
28,693
1,98,023
2,30,798
413
975
13
HFCs Network of Branches …
• 1,318 branches as on 31-03-2011 were increased
to 1,677 branches as on 31-12-2011
• 359 branches were increased by the registered
HFCs in the different States/UTs between April
to December, 2011.
14
… HFCs Network of Branches …
Name of the State/UT
Branches as on Dec. 31, % of States/UTs to
2011
total branches
Madhya Pradesh
96
5.72
Chhattisgarh
22
1.31
Delhi
58
3.46
Maharashtra
295
17.59
Karnataka
171
10.20
Rajasthan
87
5.19
Uttar Pradesh
68
4.05
15
… HFCs Network of Branches …
Name of the State/UT
Branches as on Dec. % of States/UTs to
31, 2011
total branches
Uttrakhand
16
0.95
Jharkhand
9
0.54
Himachal Pradesh
5
0.30
37
2.21
Arunachal Pradesh
3
0.18
Assam
6
0.37
Meghalaya
1
0.06
15
0.89
2
0.12
Haryana
Mizoram
Jammu & Kashmir
16
… HFCs Network of Branches …
Name of the State/ UT
Branches as on Dec.
31, 2011
% of States/UTs to
total branches
Gujarat
151
9.00
Tamil Nadu
226
13.48
Andhra Pradesh
146
8.71
Kerala
118
7.04
West Bengal
41
2.44
Punjab
34
2.03
7
0.42
17
1.01
Goa
Odisha
17
… HFCs Network of Branches
Name of the State/
UT
Branches as on Dec.
31, 2011
% of States/UTs to
total branches
Bihar
6
0.36
Manipur
9
0.54
Nagaland
1
0.06
Andaman & Nicobar
1
0.06
Sikkim
1
0.06
Puducherry
9
0.54
Chandigarh
18
1.07
1
0.06
1,677
100.00
Tripura
Total
18
Complaints received against HFCs …
• Bank is receiving complaints against HFCs – directly from
Customers, through Government of India, RBI, etc., especially
relating to the following issues:
– Interest rates
– Loan administration
– Post repayments
– Defaults
– Rejection of loan application
– Others
19
… Complaints received against HFCs …
•
Deposit related complaints (3)
SN
1
2
3
Nature of Complaint
Premature
withdrawal
without
payment of interest
Non receipt of TDS Amount
Delayed payment of FDR etc.
Jan. to Mar., 2012
1
0
2
• Loan related complaints (257)
1
2
3
4
5
6
Interest rates
Loan administration
Post repayments
Defaults
Rejection of loan application
Others
74
126
48
0
1
8
20
… Complaints received against HFCs
• HFCs are advised to act fairly and in a transparent
manner, and provide complete information to
customers on interest rate, common fees and
charges, etc.
• Every HFC should have a system and a procedure
for receiving, registering and disposing of
complaints and grievances in each of its offices/
branches.
21
MULTIPLE FINANCING – A BRIEF CASE STUDY …
• Total Number of HFCs involved
:
8
• Total Number of Loans disbursed by HFCs :
290
• Total Amount of Loan involved (Rs. crore)
70.42
:
22
Multiple Financing – A Brief Case Study …
Model 1 : Involvement of many HFCs and Banks
HFCs1 to n
Br1
Brn
Flat1
Banks*1 to n
Br1
Brn
Flatn
* - Details not available with NHB
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… Multiple Financing – A Brief Case Study …
Model 2 : Involvement of many HFCs
HFC1
Br1
Brn
Flat1
HFCn
Br1
Brn
Flatn
24
… Multiple Financing – A Brief Case Study …
Model 3 : Involvement of many branches of an HFC
HFC
Br1
Br2
Flat1
Flat2
Br3
Brn
Flat3
Flatn
25
… Multiple Financing – A Brief Case Study
Model 4 : Involvement of single branch of an HFC
HFC
Br1
Br2
Flat1
Flat2
Br3
Brn
Flat3
Flatn
26
Thank you
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