Taking Home Loan From An NBFC? Beware Of High-Risk Ones
Non-Banking Financial Companies (NBFC) are extremely popular especially among those who find it difficult to obtain a loan from the formal banking ecosystem. Access to credit is a critical requirement, therefore, NBFCs do look like they can outshine the banks. In fact, it was projected that with the number of bad loans mounting, NBFCs are in a better position to compete and function well at the same time. In fact, the NBFC-microfinance industry saw an overall improvement in terms of loan disbursements to the tune of 43 per cent. The loan portfolio stood at Rs 29,800 crore last year. By the Q3 of this year, amount of loans disbursed touched Rs 42,701 crore. NBFC’s are also regulated by the Reserve Bank of India just like the traditional banks. Of late, there has been further tightening of this regulatory network. As per the RBI records, there are close to 12,000 NBFC’s in the country.
About 9,500 NBFCs, which is 80 per cent of those operational, have been categorised as ‘high risk’ prone because these haven’t complied with the provisions of the anti-money laundering law. The Financial Intelligence Unit (FIU) released this list. The unit that is under the finance ministry is responsible to check crimes in the Indian economy.
Most of these non-compliant NBFCs defaulted when it came to appointing a designated director and a principal officer who would look into suspicious transactions.
The names of these NBFCs are out in the open to warn the public. "The publication of names is primarily a step by the FIU to make aware the public that these NBFCs are not law compliant and that they should refrain from indulging into transactions with them," a senior finance ministry official said. Once, the defaulting company complies, its name would be struck off the list.
Home loans from NBFCs
You would have heard about big names like Bajaj Finserv, Indiabulls, LIC Housing, HUDCO, etc. These and much more are all NBFC’s. Usually, home loan seekers opt for home loans from NBFCs if they fail to fulfil the bank’s eligibility criteria or if they wish to go in for a faster approval. Those who aren’t able to provide income documents or in cases where high home loan interest rates do not seem to affect one’s finances – in all or any of these situations, home loan from an NBFC becomes the right choice. Some also turn to NBFCs to seek a large amount of loan although the eligibility might be doubtful.
With inputs from Housing News