November 22, 2006
The Chief Executive Officers of
All Primary (Urban) Co-operative Banks
Dear Sir/Madam,
Housing Loans – Implementation of Delhi High Court Orders- UCBs
Please refer to our Master Circular UBD.PCB.MC.No.6/09.22.010/06-07
dated July 7, 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 a 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.
Yours faithfully,
(N.S.Vishwanathan)
Chief General Manager-in-Charge