Page 19 - Banking Finance April 2018

HOUSING

HOUSING

NEWS
NEWS
NEWS
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NEWS

Real estate boom in Citi India launches home loan linked to T-Bill rate

Hyderabad Citi India has become the first bank in India to launch a home loan product linked
to the three-month Government of India Treasury
Hyderabad is witnessing a real es- Bill benchmark rate (T-Bill). This is seen to be a bet-
tate boom ter deal for home loan borrowers from the trans-
when property parency point when compared to the current sys-
market is slug- tem of linking home loan rates to the marginal cost
gish in the rest of funds-based lending rate (MCLR).
of the country.
It is the only In the current MCLR regime, a home loan borrower will have to take the word
major city in the country that is giv- of the bank on what the MCLR is and go with the rate offered without being
able to externally validate it. However, in the new system of an external bench-
ing good return on investment. In
Hyderabad property sales have mark, a borrower can have transparency by seeing the underlying rate.
grown by 32% from the average of The newly introduced T-Bill linked home loan is based on the three-month T-Bill
2013-2014 to 2017, according to a rates published on the 12th of each month by Financial Benchmarks India Pvt
research. Ltd (FBIL) and is available to all new and existing home loan customers. FBIL is
recognised by the RBI as an independent benchmark administrator.
Telugu Desam Party is demanding spe-
cial category status for Andhra Pradesh Shinjini Kumar, Country Business Manager, Global Consumer Banking, Citi India,
as it needs funds to develop the new said that the Treasury Bill-linked home loan is in line with global best practices,
capital, Amaravati. In Delhi, Mumbai, local regulatory expectations on the use of external benchmarks and also offers
Bengaluru, Pune, Chennai, and a better client experience.
Kolkata, sales have dropped sharply
since 2013-14. Among the seven cities, Homebuyers may get benefit under insolvency proceed-
Delhi-NCR saw the biggest drop in sales ings
at 67% while Bengaluru saw the small- Homebuyers could be treated on a par with un-
est drop at 21%.
secured financial creditors at insolvency proceed-
The major reason is the political sta- ings for real estate companies. If adopted, the
bility it gained in 2014 when it was move will cheer those who have acquired resi-
separated from Andhra Pradesh af- dences from companies such as Jaypee
ter a long period of instability and Inftratech, Unitech and Amrapali and find themselves at the back of the queue
uncertainty. Another reason is the when it comes to seeking recompense. This is among proposals made by a com-
government's focus on development mittee tasked with reviewing the Insolvency and Bankruptcy Code (IBC) and
of infrastructure. under consideration by the government, according to sources.

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