ALLAHABAD BANK Retail Credit Department

Head Office: 2, Netaji Subhas Road, Kolkata 700001 Instruction Circular No. 12720/Retail Credit/2013-14/22 Date: 25.10.2013

To All Offices & Branches

Upfront Disbursal of Housing Loan Attention of Branches / Offices is drawn to Head Office Instruction Circular No. 12185/Retail Credit/2012-13/22 dated 01.12.2012 on Modified guidelines under All Bank Aashiana Scheme, wherein the disbursement procedure of the loan in case of purchase of flat / house from the Developer / Builder has been mentioned as under: The disbursement in case of purchase of Flat/ House from the Developer/ Builder shall be in accordance with the various Payment Plans available with the Developers / Builders and terms of Sale Agreement. Any full down payment of entire loan amount without the creation of Charge on flat / house require specific permission from the Committee HLCC GM at Head Office. Instances have come to the notice for considering the proposals regarding upfront disbursal of sanctioned individual Housing Loans to the Builders without linking the disbursals to various stages of construction of Housing Projects, interest / EMI on the Housing Loan availed by the individual borrower will be serviced by the Builders during the construction period / specified period etc. Recently, Reserve Bank of India vide its letter DBOD.BP.BC.No.51/08.12.015/2013-14 dated September 3, 2013 has advised that such practices, as mentioned above, are likely to expose the Banks as well as Housing Loan borrowers to several risks like: i) Non-completion of the Project in time ii) Diversion of Funds iii) Default / delayed payment of interest / EMI by the Developer / Builder during the agreed period on behalf of the borrower iv) Lower credit rating / scoring of the borrowers by Credit Information Companies (CICs) wherein delayed payment of interest / EMI to the Bank by the Developer / Builder during the agreed period on behalf of the borrower.

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In view of the above, it is reiterated that disbursal of Housing Loans sanctioned to individuals should be closely linked to the stages of construction of the Housing Project / Houses and upfront disbursal should not be made in cases of incomplete / underconstruction / Green Field Housing Projects. All the Offices/ Branches/ CRBBs/ RBBs are advised to take a careful note of the guidelines and ensure meticulous compliance. Hindi version of this circular will follow shortly.

(A K Chatterjee) General Manager

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