Home Loans to Secure Over Earthquake Resistant Structures Only - NDMA says

June 26, 2007: Now, people borrowing home loans will have to ensure their home to be earthquake resistant, as per the new guidelines released by the National Disaster Management Authority (NDMA). Such a decision has been taken by the authority to strengthen collateral security. It will also prevent the borrower against parking fund into substandard properties.

Banks have been asked to consider the fulfillment of seismic safety before lending home loan for construction of multistoried buildings. NDMA has already sent copies containing new guidelines to the Ministry of Finance (MoF), which will forward it to the Reserve Bank of India for insurance.

Buildings whether residential or commercial (multiplexes, bridges, hospitals, and other important significant structures whose completion is after June 30, 2007 will have to comply with new earthquake resistant design, as per the guidelines released by the authority.

For HDFC Bank, it is a welcome move to offer home loans only to earthquake resistant houses. The banks can set responsibility on the real estate development industry to comply with the earthquake resistant codes to stay in step with the NDMA guidelines, says HSBC Head, Personal Financial Services, India, Mr. Nicholas G. Winsor.

The decided move will also enhance the collateral security against which the banks lend and reduce their risk factor thereby making banks feel secure to offer housing loans.

Since most home loans are lent to individuals living in smaller towns and cities where self construction is the general trend, the rule will ensure safety development promising high protection of the assets in case of natural calamities, explains Kapil Wadhwan, Managing Director, Dewan Housing Financing Corporation Ltd.

Source: http://www.indianrealtynews.com