RV Verma, Chairman and Managing Director of National Housing Bank (NHB) ruled out the need for a unified regulator for banks and housing finance companies (HFCs).

He said there is no need for a single regulator for banks and HFCs as there is not regulatory arbitrage as pointed out by SBI Chairman Pratip Chaudhuri.

Verma further said that two of the directors on the board of NHB are from RBI and there is a constant process of interaction, co-ordination and cross fertilisation of ideas.

He said that business model of specialised HFCs was different from that of banks and it calls for “specialised regulation” focusing on “innovation, personalisation and efficiency in both services and pricing”.  

Chaudhuri, on the other hand, feels that there is regulatory arbitrage between banks and HFCs and in order to remove it, there is a need for a single regulator for all housing loans.

He also suggested that the Reserve Bank of India (RBI) could serve as the sole regulator for all loans including home loans. There are nearly 57 HFCs together accounting for a little over 30 per cent of the Rs 7 lakh crore housing loan market.

Verma, however, refused to comment on the issue of a single regulator “dealing with both prudential and market conduct aspects for the medium run” as suggested in the final report of the Financial Sector Legislative Reforms Commission.