H-F racket a case of bribery; cannot be called scam: CREDAI

NEW DELHI: Realty body CREDAI on Sunday termed the recent housing finance racket as a case of "bribe and kick-backs for loans" and said the case cannot be called as a housing scam.

Recently, the CBI busted the housing finance racket and arrested eight top officials of banks and financial firms on charges of taking bribe to grant corporate loans.

"...this is a straightforward case of 'graft' and illegal actions by some. The guilty need to be brought to book at the earliest but this cannot be termed as a 'housing scam' or a systemic failure," CREDAI said in a statement here.

"In fact it may be termed as a case of bribes, graft and kick-backs for loans," it said.

It said that the current faith of investors in the Indian economy has been exhibiting a positive trickle down effect in the real estate market which, regrettably, is thwarted with certain malpractices carried out by some individuals to obtain loans.

"The systems of funding are very much in place and all project fundings are meticulously scanned and secured and often backed by the personal and/or bank guarantees. Thorough due diligence is done," it added.

The real estate funding plays a pivotal role in generating revenue for the banks as the interest is higher than any other businesses.

"Such episodes, if not presented in the correct perspective cause a negative market sentiment that in turn unnecessarily impedes the pace of development resulting in shortages. This is turn would hurt home buyers as shortages lead to rising prices," CREDAI President Santosh Rungta said.

Rungta asked the government to develop a transparent online mechanism to grant loans for real estate development projects in the absence of which discretionary sanctioning may lead to breeding grounds for graft.