Keen to cater to NRIs

One of the primary reasons in the past, especially in the 1970s and 1980s, for many NRIs who headed out to the Gulf in search of jobs, was the desire to own a home in India. In those days, one of the toughest things for a wage earner in India was to rustle up the funds to buy a home. The words 'mortgage' and 'housing loan' were virtually unheard of in India till the late 1970s, so many who headed to the Gulf had the objective of saving enough money to enable them to buy that small apartment on the outskirts of Mumbai, Delhi's emerging satellite cities, or in Bangalore or Kochi.
In the absence of housing loans, many had to rely on inherited wealth, hope to borrow from near and dear friends or wait for the earning members to retire when they could use their provident fund and gratuity money to invest in a home. Or of course, just wish that someone from the family would land a job in the Gulf and be able to save enough money to invest in a flat. Being an NRI was a much-sought-after goal in India in the 1970s as the government appeared to pamper them.
For instance, there used to be long waiting periods to buy two-wheelers in the 1970s and consumers had to deposit Rs500 and wait indefinitely for 10 to 20 years to get deliveries. But if you had a relative abroad, he could buy a Bajaj Chetak scooter if he paid for it in foreign currency and got the delivery in India. Even when colour television was introduced in time for the 1982 Asiad games in Delhi, there was a rush for the sets in Dubai, Singapore and Hong Kong and the NRIs who were living in these cities could be seen bringing colour TV sets home.
For the Indian home loans segment, the big break came in 1977 when financial institutions established the Housing Development Finance Corporation Ltd (HDFC), which is today one of the largest such institutions in the country. Most banks were reluctant to extend loans to individuals wanting to buy a home as there was no way to ensure their repayment. If a builder disappeared after getting the advance, the matter would drag on in civil courts for decades.
HDFC revolutionised the home loan sector in India and set up elaborate rules that were then unknown in the country to evaluate and monitor a project, clear loans to individuals working in reputed companies and institutions, disburse the money to the developer and also set equated monthly instalments to recover the loans both on short-term and long-term basis.
Today, there are nearly a hundred housing finance companies (HFCs) in India, and more than half a dozen have huge portfolios. The biggest, of course, is HDFC Ltd, followed by LIC Housing Finance and Dewan Housing.
Other significant players include Indiabulls Housing Finance, PNB Housing Finance, Gruh Finance, Tata Capital, Canfin Homes, Repco Home Finance, India Infoline and ICICI Home. Leading public sector lender Punjab National Bank and PE firm Carlyle - the promoters of PNB Housing Finance - are now planning to exit the company. And among those keen on acquiring control over it is Blackstone. The last three years saw the emergence of more than two-dozen new HFCs in India. Naturally, most of the HFCs in India are keen to cater to the NRI market in the Gulf and other parts of the globe.
The housing finance sector in India is overseen by two regulators - the Reserve Bank of India and the National Housing Bank. The regulators constantly monitor developments both in India and abroad and intervene with new rules or changes to existing ones to cope up with the developments. This has resulted in the prevention of the build-up of asset bubbles in India after the regulators prohibited banks and HFCs from funding land transactions.
One of the most crucial changes in the sector was the enactment of the Sarfaesi Act, 2002, which has emerged as an effective and speedy recovery mechanism. In the past, the only way for a lender to recover loan from a defaulter was through civil courts, and cases could drag on for decades. The Sarfaesi Act has helped clean up the books, resulting in curbing non-performing loans.
The remarkable changes in the Indian mortgage segment have made things hassle-free for NRI borrowers, especially those living in the Gulf. Banks and financial sector players are eager to cater to their needs and are offering a variety of competitive products. For NRIs looking for home loans today, things are a lot easier than in the past. With the emergence of online platforms, overseas Indians can submit applications to the lenders without having to visit their offices.
The NRI borrower has to submit the salary slips for the past three months and a bank statement to the lender. A power of attorney has to be given to the co-applicant; the format for the letter is available with Indian diplomatic missions abroad. Technology has thankfully brought about remarkable changes, cutting down the time to remit funds back home.
According to a recent report by KPMG, three new technologies - artificial intelligence (AI), blockchain and FinTech - have emerged as disruptors that are not only transforming the way banks function but also results in cost optimisation and boosts customer services. Costs of sending money from the UAE to Southasia are considered to be among the lowest in the world.
Many banks now ensure instant credit of the money to your account in India, or to other bank accounts in about two hours. These are of course subject to cut-offs relating to transactions done on India's two popular systems, NEFT (the National Electronic Fund Transfer system) and the RTGS (real time gross settlement).
With demand for housing finance from Gulf-based NRIs expected to continue growing over the coming years, the lenders too are deploying modern new technologies, making the entire procedure hassle-free and quick. For NRIs looking for home loans today, things are a lot easier than in the past. With the emergence of online platforms, overseas Indians can submit applications to the lenders without having to visit their offices.