New Delhi, Aug. 7 -- Shajai Jacob

In a recent move, the National Housing Board (NHB) has directed Housing Finance Companies (HFCs) in India to 'desist from offering' loans for financing subvention schemes offered by developers. Loan disbursements will now have to be strictly linked to construction progress. While this will doubtlessly result in an added financial on developers who used subvention schemes, it is actually an important step to safeguard the interest of lakhs of homebuyers - especially NRIs who were major consumers of such schemes.

In 2013, the RBI had clamped down on banks to stop upfront disbursement to developers for under-construction or greenfield projects offering such schemes and required banks to stick to constructi...