The Reserve Bank of India (RBI) should be the regulator for all home loans provided by banks or housing finance companies (HFCs), the
State Bank of India (SBI) has suggested.
Currently, RBI regulates home loans provided by all commercial banks while those provided by HFCs like HDFC Ltd, LIC Housing Finance etc are regulated by the National Housing Bank.
"I see no justification for having a separate regulator for home loans. Perhaps the regulations of objective would be better served with RBI itself becoming the sole
regulator for all loans, including home loans," SBI Chairman Pratip Chaudhuri said last week.
Banks currently account for more than two-thirds of total home loans disbursed in the country.
"A single regulator having the same rules for all players would help remove the regulatory arbitrage that existed between banks and HFCs," Chaudhuri said.
RBI had raised objections to SBI's dual rate policy on housing loan which was
tagged as teaser loans introduced some time ago.
"If a bank offers a slightly lower rate in the initial years and higher rate in later years, it is called a teaser loan and they are required to make provision, but could similar rules not be applied for other players in the home loan market?" Chaudhuri said.
Meanwhile, SBI has urged the central bank to reduce the minimum tenure of deposits to three days from seven days for inducing more flexibility of consumers.
"The liquidity risk was not very different from a seven-day deposit and three day deposit, but the question was why make banks handicapped?" Chaudhuri asked.
"These are not issues that will lead to inflation or bring imbalances in financial stability, but induce flexibility to the depositor," he said. "Now we have shadow banking offering investors investment for even one day."
With inputs from PTI
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