Take undertaking before giving home loan: RBI

MUMBAI: The Reserve Bank of India (RBI) following a Delhi High Court order, on Friday issued directives to banks to follow certain additional procedures while sanctioning housing loans.

The Monitoring Committee constituted by the Delhi High Court had issued these directives for immediate compliance by the banks and financial institutions (FIs).

This is to prevent unauthorized construction, misuse of properties and encroachment on public land.

Accordingly, the apex bank today said that before sanctioning a home loan, banks/FIs must obtain a copy of the sanctioned housing plan by a competent authority in the name of the person applying for a home loan for constructing a house.

Banks must also obtain an affidavit-cum-undertaking from that person that he/she will not violate the sanctioned plan and that the construction will be strictly as per the sanctioned plan.

Further, it will be the sole responsibility of the executant to obtain completion certificate within three months of completion of construction.

If this is not adhered to, banks will have the power to recall the entire loan, interest, costs and other bank charges

The apex bank further stated, that an architect appointed by the bank must also certify at various stages of construction that it is strictly as per sanctioned plan.

The architect must also state at a particular point of time that the completion certificate of the building issued by the competent authority has been obtained.

Source: The Economic Times