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Updated: May 19, 2013 00:01 IST

‘RBI should be sole regulator for home loans’

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State Bank of India Chairman Pratip Chaudhuri
PTI State Bank of India Chairman Pratip Chaudhuri

State Bank of India, on Saturday, suggested that the Reserve Bank of India (RBI) should be the regulator for all home loans provided by banks or housing finance companies (HFCs).

“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,” State Bank of India Chairman Pratip Chaudhuri said on the sidelines of a banking summit here.

Banks at present accounted 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, he said.

At present, the RBI regulates home loans provided by all commercial banks, while HFCs such as HDFC , and LIC Housing Finance Co offer home loans which are regulated by the National Housing Bank.

The 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?” Mr. Chauduri said.

Meanwhile, SBI has urged the RBI to reduce the minimum tenure of deposits to three days from seven days for inducing more flexibility of consumers.

“These are not issues that will lead to inflation or bring imbalances in financial stability, but induce flexibility to the depositor,” Mr. Chaudhuri said. “Now we have shadow banking, offering investors investment for even one day,” he said.

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