The National Housing Bank (NHB) has issued directives to housing finance companies (HFCs) to address consumer concerns regarding the mis-selling of insurance products bundled with home loans. Reports indicate that HFCs are now required to obtain clear, separate consent from borrowers before offering insurance products, and, crucially, must provide at least two policy options.
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The NHB’s move aims to protect borrowers from potential unfair practices in the home loan process.
A key takeaway is that purchasing insurance with a home loan is not mandatory. Gaurav Mohta, chief marketing officer at Home First Finance Company, emphasized this, stating, “Borrowers are not obliged to buy insurance from their lender.” Lenders are also prohibited from making the purchase of an insurance product a prerequisite for loan approval.
These measures are designed to empower borrowers by providing them with transparency and choice when it comes to insurance bundled with home loans.
