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HOME LOAN AFFIDAVIT AND VIEW OF MR.V.N.SWAMY & RBI MASTER CIRCULAR
December 9, 2011 by ecopackindia · Leave a Comment
Mr.V.N.Swamy`s View and the RBI Master Circular.
On the first blush, one’s reaction is against the very validity of, or rationale behind, or a lawful justification for, a borrower being required to furnish the lending bank or any other entity with an affidavit of this kind.
One is not clear on the following points, rather baffled/totally nonplussed, as they are seemingly imponderables, especially if it is a property, being a unit of a building, known as-’flat’ or ‘apartment’ :
1. In respect of all requirements, including development and construction of a multi-unit building, intended for sale of such units to the public as such, the entire responsibility and all connected obligations, primarily for completion of the project in every respect, and strictly as per the governing special State enactment, and other related rules and regulations, are those of / rest only with, the promoter/developer/seller of the property.
That the correct legal position is so, and could conceivably be no different, with no room for even an iota of doubt whatsoever, should be, in one’s strong conviction, more than abundantly clear even from a close but mindful reading of the extant law on the subject in any State, as also the proposed central enactment for exercising powers of statutory regulation and control over the promoter’s responsibilities and obligations.
2, it is rather intriguing to note that, the affidavit is said to have been furnished in deference to some of the readers’ demand. The most crucial points of all, which have, however, been left to be made clear, and remained not clarified, are these:
Whether such a request has come to be made by any reader because of his being faced with any such requirement in regard to his intended borrowing?
Is it a new requirement; if so, since when?
So far as one individually knows or remembers, this is the first time that a news of this kind has come to be propagated; is that not really so (subject to correction, if that were otherwise. !
Whether before suggesting or drafting any such format, its author (s) has at all considered mindfully of any of its legal implications or untoward but totally unwarranted consequences the idea entails, to the detriment of the lawful rights and interests of the community of borrowers at large?
Be that as it may, in one’s strong view, any such idea deserves to be lawfully resisted within the frame work of the applicable law,with all force.
Dear Sir,
Please check with the borrowers and the banks. Most of the banks have obtained such affidavits from the borrowers.
The RBI in its MC has directed the banks as under:
Please refer to our Master Circular DBOD.No.DIR.(Exp).BC.04/08.12.01/2006-07 dated July 1, 2006 on Housing Finance.
2. During the hearing in the captioned Writ Petition, the Hon’ble High Court of Delhi has directed as under:
‘ We hereby direct that henceforth Banks will check whether the loan sought for is for authorized structure or an unauthorized structure and the Banks will obtain an undertaking on an affidavit from the parties seeking such loans that the building is constructed as per sanctioned building plans. Banks shall also ensure that the sanctioned building plans are attached with the undertaking. Let necessary directions be issued in this regard either by the concerned Ministry of Banking or the Reserve Bank of India’.
3. In this context, the Monitoring Committee constituted by the Hon’ble High Court of Delhi regarding Unauthorised Construction, Misuse of Properties and Encroachment on Public Land, has issued the following directions for immediate compliance by the banks/Financial Institutions:
A. Housing Loan for building construction
i) In cases where the applicant owns a plot/land and approaches the banks/FIs for a credit facility to construct a house, a copy of the sanctioned plan by competent authority in the name of a person applying for such credit facility must be obtained by the Banks/FIs before sanctioning the home loan.
ii) An affidavit-cum-undertaking must be obtained from the person applying for such credit facility that he shall not violate the sanctioned plan, construction shall be strictly as per the sanctioned plan and it shall be the sole responsibility of the executant to obtain completion certificate within 3 months of completion of construction, failing which the bank shall have the power and the authority to recall the entire loan with interest, costs and other usual bank charges.
iii) An Architect appointed by the bank must also certify at various stages of construction of building that the construction of the building is strictly as per sanctioned plan and shall also certify at a particular point of time that the completion certificate of the building issued by the competent authority has been obtained.
B. Housing Loan for purchase of constructed property/built up property
i) In cases where the applicant approaches the bank/FIs for a credit facility to purchase the built up house/flat, it should be mandatory for him to declare by way of an affidavit-cum-undertaking that the built up property has been constructed as per the sanctioned plan and/or building bye-laws and as far as possible has a completion certificate also.
ii) An Architect appointed by the bank must also certify before disbursement of the loan that the built up property is strictly as per sanctioned plan and/or building bye-laws.
C. No loan should be given in respect of those properties which fall in the category of unauthorized colonies unless and until they have been regularized and development and other charges paid.
D. No loan should also be given in respect of properties meant for residential use but which the applicant intends to use for commercial purposes and declares so while applying for loan.
4. Banks are advised to strictly comply with the above directions with immediate effect.
