National Housing Bank (NHB) has decided to act according to Reserve Bank of India and has tightened norms for home loans by lenders under its umbrella.
NHB is the regulator for the housing finance companies (HFCs). HFCs like HDFC, GIC Housing, LIC Housing Finance and many others come under the umbrella of NHB.
It has increased the provisioning for teaser loans for these HFCs, proposed a higher loan to value (LTV) ratio, increased the risk weightage to be allotted to loans above Rs 75 lakhs and also directed HFCs to keep 0.40% of their total outstanding loans which they lend out to others apart from individuals.
HFCs will now have to follow RBI's mandate on teaser loans and make 2% provision on loans of such cadre.
This is going to come as a major hit to HFCs which are estimated to have a total outstanding amount of Rs 34000 crore in case of teaser loans. The total loan outstanding in teaser loan category is Rs 20,000 crore for HDFC Bank. A 2% provision on this will amount to Rs 400 crore.