In light of the demolition of buildings near the full tank level (FTL) and buffer zones by the Hyderabad Disaster Response and Asset Monitoring and Protection Agency (HYDRAA), banks are adopting a more cautious approach to house loan approvals. Sources reveal that loan sanctioning teams must strictly adhere to construction plans, with no allowances for the usual 10% deviation. Officials are now required to conduct field visits instead of relying solely on assessments from engineers. Although revised guidelines are not yet issued, the process is expected to become more structured, affecting property purchases and complicating recovery of loans for demolished structures.
In response to the demolition of buildings located in the full tank level (FTL) and buffer zones of lakes by the Hyderabad Disaster Response and Asset Monitoring and Protection Agency (HYDRAA), banks are becoming more cautious in their house loan approval processes. Sources indicate that many banks have directed their loan sanctioning teams to exercise heightened observance, even when all required documentation has been approved by authorities like the Greater Hyderabad Municipal Corporation (GHMC), the Hyderabad Metropolitan Development Authority (HMDA), and RERA.
An official from a nationalized bank, who preferred to remain anonymous, reported that during review meetings, senior officials highlighted the importance of strictly adhering to the proposed construction plans, prohibiting even the usual 10% deviation that was previously accepted for loan approvals, particularly for properties near water bodies. Additionally, officials have been instructed to conduct field visits around these areas, marking a departure from the earlier practice of relying solely on engineers and field officers for evaluations. A source noted that officials might also need to consult with the GHMC and other civic authorities regarding the permissions granted to clarify any uncertainties.
Although banks have not yet released official revised guidelines for loan approvals, the heightened caution is expected to make the house loan process more structured than in the past, requiring careful consideration when purchasing properties. For example, a banker mentioned that a property in Secunderabad was denied registration shortly after its sale due to its proximity to the full tank level (FTL). Additionally, banks are facing challenges in recovering outstanding loan amounts for structures that were demolished by HYDRAA. Sources indicate that while there are no specific restrictions in place, legal action may be necessary to attach the borrower's other assets. HYDRAA officials are also contemplating meetings with banks to provide their insights on loan approval processes.
The recent actions by HYDRAA have prompted significant changes in the banking sector's approach to housing loans, reflecting a heightened awareness of environmental and regulatory risks. As banks tighten their approval processes, potential homebuyers may face increased inspection and a more difficult evaluation of properties. This shift underscores the importance of thorough due diligence and understanding local regulations. Furthermore, the potential for legal complexities regarding outstanding loans adds another layer of caution for both banks and borrowers. Ongoing discussions between HYDRAA and financial institutions may lead to clearer guidelines, ultimately aiming to enhance accountability and protect valuable resources.
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