Lok Sabha Question No. 174 (UNSTARRED), answered on 2023-12-04
Subject: Non-Banking Financial Companies NBFCs
Ministry: FINANCE
Asked by: Andimuthu Raja, A. Ganeshamurthi

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA UN-STARRED QUESTION NO. 174

ANSWERED ON 4 th  DECEMBER, 2023/ AGRAHAYANA 13, 1945 (SAKA)

## 'NON-BANKING FINANCIAL COMPANIES'

174:   Shri A. Raja:

Shri A. Ganeshamurthi:

Will the Minister of FINANCE be pleased to state :

- (a) whether Government has ever assessed the total number of persons who have taken home loans from Non-Banking Financial Companies (NBFCs) and Nationalized/Commercial Banks separately;
- (b)   if so, the details thereof and if not, the reasons therefor;
- (c)  whether Government is aware that some NBFCs are charging almost double rate of interest on home loans as compared to nationalized banks; and
- (d)  if so, the details thereof and the steps taken against such exploitative institutions to safeguard the interest of common man?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (DR. BHAGWAT KARAD)

- (a) & (b): As informed by National Housing Bank (NHB) and Reserve Bank of India (RBI), the number  of  Housing  loan  accounts  with  Non-Banking  Finance  Companies  (NBFCs)-Housing Finance Companies (HFCs) and Scheduled Commercial Banks (SCBs) respectively, during last 3 years, are as follows:

|   Year (as on 31 st March) | No. of Housing loan of HFCs   | No. of Housing loan of SCBs*   |
|----------------------------|-------------------------------|--------------------------------|
|                       2021 | 56,67,619                     | 1,01,13,778                    |
|                       2022 | 61,39,126                     | 1,09,53,257                    |
|                       2023 | 65,45,049                     | 1,17,82,223                    |

(c) & (d): As apprised by RBI, they don't prescribe interest rates to be charged to borrowers by NBFCs/HFCs.  They  have  further mentioned that while NBFCs/HFCs  are  operationally independent  to  decide  on  credit-related  matters viz .  rate  of  interest  on  loans,  other  applicable charges,  type  of  loans,  loan  appraisal  /disbursement/repayment/  recovery  etc,  RBI  has  issued various guidelines/norms applicable to NBFCs/HFCs with regard to the charging of rate of interest to its borrowers which include, inter alia, the following:

- (i) The Board of each NBFC/HFC are required to adopt an interest rate model taking into account relevant factors such as cost of funds, margin and risk premium and determine the rate of interest to be charged for loans and advances. The rate of interest and the approach for  gradations  of  risk  and  rationale  for  charging  different  rate  of  interest  to  different categories of borrowers shall be disclosed to the borrower or customer in the application form and communicated explicitly in the sanction letter.
- (ii) The rates of interest and the approach for gradation of risks shall also be made available on the  web-site  of  the  NBFCs  or  published  in  the  relevant  newspapers.  The  information published on the website or otherwise has to be updated whenever there is a change in the rates of interest. The rate of interest has to be an annualized rate so that the borrower is aware of the exact rates that would be charged to the account.
- (iii) RBI has laid down a Fair Practices Code, which has to be adhered to by NBFCs and the rate of interest charged shall be transparently disclosed to the borrower in the vernacular language, as understood by the borrower.
- (iv) To protect the interest of customers, Grievance Redressal Procedure has also been laid down to adequately address customer complaints. If the complaint against NBFCs/HFCs is  not  redressed  within  a  period  of  one  month,  the  customer  may  approach  RBI Ombudsman/NHB for grievance redressal.

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