The Indian Chamber of Commerce, Associated Chambers of Commerce and Industry of India, Assocham has advised the finance ministry to categorize housing finance companies as a separate group from non-banking finance companies (NBFC) and other finance companies.
Assocham issued a statement to finance minster P. Chidambaram, which said that housing finance providers should be made a separate sector for the purpose of executing sectoral caps which have been planned for investments by mutual funds policies. Add to this the fact that HFCs provide home loans at the rate of 10.5 percent per annum to retail borrowers and hence they cannot be put in the same league as NBFCs.
It further added that the outcome of low interest rates charged by housing finance companies will ultimately be an increase the demand for new homes. This would further assist the formation of new housing facilities in India, decreasing the shortage of houses in urban areas.
The growth in demand for housing will increase the demand in complementary sectors such as cement, steel, and ancillary businesses related to construction industry and also improve the employment conditions in the country.
It is to be noted that stock exchange regulator, Securities and Exchange Board of India ( SEBI) recognizes HFCs in the same sector as NBFCs and other financial service providers.