EVALUATING FAIR PRACTICES CODE COMPLIANCE IN INDIA’S HOUSING FINANCE SECTOR: A COMPARATIVE STUDY OF BANKS, HFCS, BORROWERS’ & LENDERS’ PERCEPTION

The housing loan sector in India has witnessed exponential growth, making transparency and informed decision-making critical for sustainable market development. To promote transparency, both the Reserve Bank of India (RBI) and the National Housing Bank (NHB) have mandated that lending institutions adhere to a Fair Practices Code (FPC). However, despite these guidelines, rising consumer complaints indicate a gap between regulatory expectations and actual practices. This study aims to empirically examine the compliance of FPC norms among Banks and Housing Finance Companies (HFCs), as perceived by lending officials and borrowers. Primary data were collected from 294 borrowers and 102 lending branches using structured questionnaires. The findings reveal significant discrepancies not only between banks and HFCs in their compliance levels but also between the perceptions of borrowers and lenders. The results underscore the existence of information asymmetry, contributing to borrower dissatisfaction and potential market inefficiency. Recommendations are offered for improving FPC implementation and harmonizing borrower-lender expectations to ensure a more transparent and fair lending environment.