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NBFC cannot offer CASA (Current Account, Savings Accounts) – Demand and Time Deposits, hence its cost of funds are expensive as compared to banks who offer CASA. Many a time, NBFCs borrow from Banks hence they lend at a higher rate, however they offer better structuring and flexibility of repayment. NBFC can have 100% foreign investment. In India, the working and operations of NBFCs are regulated by the Reserve Bank of India (RBI) within the framework of the RBI Act, 1934 (Chapter III-B) and the directions issued by it.
An HFC is a NBFC which offers home loans just like traditional banks. However, the difference between an NBFC and HFC is that the latter deals in home loans only. HFCs are governed and regulated by NHB (National Housing Bank). The loan sanctioning process is usually more tedious with banks in comparison to the HFCs. The latter usually has fewer paperwork requirements and fewer formalities.
The NBFC (Non-Banking Financial Company) and HFC (Housing Finance Crisis) crisis started with the failure of one of the most respected NBFCs in India, IL&FS, followed by DHFL, Reliance Capital, Altico etc. This NBFC and HFC crisis is unique in the sense that it is both a driver and a reflection of the economic slowdown. NBFCs create credit especially among those segments of the population to whom banks are skeptical in extending loans, because of their risky credit profile. They fund developers and home buyers which creates demand in the economy. As NBFCs struggled in the wake of a general wave of fear relating to the sector after the IL&FS crisis, banks cut down on their NBFC exposures, further exacerbating NBFCs’ funding positions. When lending by and to NBFCs goes down, demand in multiple sectors is affected, creating a vicious cycle.
Dr. Adv. Harshul Savla
Dr. Adv. Harshul Savla (MRICS) is a Principal Partner of M Realty (Suvidha Lifespaces) which has successfully completed more than 1.2 million sq.ft. in last 30 years across Mumbai City under the able leadership of Mr. Pramesh Rambhiya. CRISIL India recognized Dr. Harshul as “Young Thought Leader” and Realty NXT featured him as “Young Turk of Real Estate Sector”. He has won the prestigious CREDAI-MCHI Golden Pillar Award in the category of Best Debutant Real Estate Developer and has been awarded “Young Achiever of the Year” by ET NOW, CNN News 18, ZEE Business, MAHARASHTRA Times, ABP News, MID DAY and Realty Quarter.
Dr. Harshul was awarded Doctorate (Ph.D.) for his Thesis on REITs (Real Estate Investment Trusts) which is first such thesis in India on the said subject and the Thesis is also available in the form of a book. Apart from this he is an NSE Certified Market Professional - Level 4 and has done a course on ‘Strategic Real Estate Management’ from ISB, Hyderabad.
Dr. Harshul is also the National Head of the Committee on E-Learning and Masterclass at CREDAI National.
Dr. Harshul is also an Amazon Best Selling Author and has authored one of India’s most comprehensive books on Real Estate Sector. Some of his books are: ERA Post RERA, Real Estate Laws, Reality of Realty, Real Estate Valuation, Affordable Housing, NBFC & HFC Crisis, Fractional Ownership & REITs, Insolvency & Bankruptcy Code. He regularly writes articles for fortnightly business magazine “Property House”.
Dr. Harshul is also a Visiting Faculty at the prestigious RICS School of Built Environment, teaches the subject ‘Real Estate Development Process’. He is also Guest Lecturer at REMI - The Real Estate Management Institute, Mumbai.
