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SBI Chairman Pratip Chaudhuri on Saturday pitched for a single regulator for all housing loans.
Currently, the RBI regulates the housing loans provided by banks, while the National Housing Bank is the regulator for home loans disbursed by housing finance companies such as HDFC Ltd and LIC Housing Finance Co Ltd.
According to Chaudhuri, a single regulator would help remove the “regulatory arbitrage” currently existing between banks and housing finance companies.
“I see no justification for having separate regulators for home loans. Perhaps, the objective would be better served with RBI itself becoming the sole regulator for all loans, including home loans. In no other country do we have different regulators for different verticals such as industrial loans, home loans and vehicle loans,” he told newspersons on the sidelines of a banking summit, organised by the Indian Chamber of Commerce here on Saturday. According to Akeel Master, Head of Financial Services, KPMG in India, bringing all lending activities under the purview of a single regulator seems to be the way forward.
“Having more than one regulator for similar activities sometimes leads to conflict of interest and gives rise to certain regulatory arbitrage,” Master told Business Line .
The Financial Sector Legislative Reforms Commission headed by Justice (retd) B.N. Srikrishna in its final report recommended single regulator dealing with both prudential and market conduct aspects for the medium run.
It also said, in the long run, “this could be modified depending on the experiences gained within this country and elsewhere”.
“There has been a lot of discussion on having unified regulator for various financial services.
“In fact, the report put out by the Financial Sector Legislative Reforms Commission encourages having a unified regulatory approach in the long-term. It looks like all lending activity, whether it is housing finance or leasing, will come under one regulator,” KPMG official said.
Overseas Business
Meanwhile, SBI plans to lower its investments in overseas business this fiscal on the back of a shrinking margin in 2012-13.
“Margins from our overseas business are under pressure. My sense is that the domestic return of equity was significantly higher than overseas business,” he said.
SBI’s overseas business accounts for nearly 20 per cent of its total business.
The bank will declare its quarterly and annual results on May 23.
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