The real estate sector is the second largest sector offering employment to people in India, after agriculture. With more and more people witnessing the scope of rising in this sector, the trends forecast a significant 30 per cent increase in the number of people dealing in this sector. The Indian real estate market is expected to touch US$ 180 billion by 2020. The housing sector is expected to contribute around 11 per cent to India’s GDP by 2020. One of the significant assets that people ever invest in is a home for dwelling. This is because of the back of the lending companies extend in their new-age, customer friendly policies and the transparency in the market due to online home loan facility.
The average growth of NBFCs have nearly been around 22% from the period of 2006 to 2013. Post this period, new age financial lenders have come across the digital lending space which has shown a considerable hike in the GDP of the nation.
There are different aspects in which the NBFCs affect the home loan scenario in India. For instance, all new loans with floating interest rates offered by banks are now linked to the Marginal Cost of Lending Rate (MCLR). On the other hand, NBFCs are not tied to the MCLR. They are linked to the Prime Lending Rate (PLR), which is outside the ambit of the RBI. This is where NBFCs steal the deal when the borrowers fail to meet the loan eligibility criteria of banks. They provide customisable plans and policy offer to meet the needs of the home loan applicant and suit their needs.
NBFCs are drastically changing the trends and bringing out the leisure of digital processing.
Speedy processing – Banking sector generally has a long, time-consuming loan process to get a housing loan. While on the other hand, Non-Banking Financial Companies process loans faster than banks due to fewer restrictions and better policy offers.
Minimal documentation – Banks need elaborate documentation when it comes to availing residential property loan. NBFCs require much lesser documentation for home loans when compared to banks. Therefore, better chances of secure approval.
Faster disbursement – The ease of application and backing up of technology results in the faster disbursement of the loan. This means that the waiting and processing period to obtain a home loan is reduced. Therefore, it is generally a much faster and easier process when it comes to NBFCs.
Less stringent – Banks are usually more stringent when it comes to approving a home loan because of the lengthy agreements and loan approval cycle. NBFCs, however, have a less stringent process when it comes to approving a home loan. Moreover, the applicant gets the best home loan rates.
Accessible to individuals with low credit – As banks are more stringent when it comes to the procedure of approving a loan, it is equally applicable to the borrower’s credit score. Banks provide housing loans only to individuals that have a sound history and stable source of incoming flow of capital. However, NBFCs are open to lending money to customers who don’t have a really sound credit score.
Fewer rules and regulations – Since NBFCs are not regulated or governed by the RBI; they have lesser regulations to follow when compared to a bank. Owing to this scenario, home loans are now easily accessible to borrowers and the approval process hassle-free.
Competitive rates of interest – Due to the immense competition in the home loan industry, NBFCs are forced to keep the interest rates low. Also, when you apply for a home loan online, you will find that NBFCs also give the leverage of easy EMI cycle.