Job Neroth on Tue, May 21st, 2013 8:39:24 pm
Yes, the SBI Chairman is right in asking for a level playing field in the Housing loan market. Right now, companies like HDFC Ltd - which comes under the NHB - does not need to (and also won't) follow RBI guidelines on home loan lending under the Base Rate.
This is against the spirit of the RBI guidelines to provide transparency to customers on the interest charged to them. In the regard, HDFC and other companies under the NHB falls far short in being transparent. This regulatory arbitarage results in an unfair advantage for these companies under the NHB, while also following anti-consumer practices... which has been changed by the RBI in case of banks under their purview.
prakash on Tue, May 21st, 2013 6:27:01 pm
In case of housing loan,Banks are subjected to CRR and SLR requirements and hence source of funding of housing loans becomes costlier but in case of HFCs,there is no such requirement.However for HFCs,CASA deposits are not available for funding and hence they have to access higher interest source of funding.I presume SBI Chairman is referring to these issues when refering to arbitrage.He is right.
Sachin Sunder Poojary on Tue, May 21st, 2013 2:50:20 pm
Yes,In india we are facing an extreme regulatory arbitrage in terms of various products floating in the market. It creates ambiguity in terms of visibility of governance and creates loopholes in the law and rules regulating the products. hence it effects not only the productivity of the economy but also increase customer dissatisfaction in terms of clarity and understanding the market.
But in reality, markets and various products are interlinked and for each product we have different regulators, and thats where it creates the problem and ambiguity.
Most importantly all regulators need to be streamlined by removing dual taxation, alligning rules and laws, removing ambiguity and proper governance structure.