In this case, Informant, Kanhaiya Singhal, has filed information under Section 19(1)(a) of the Competition Act, 2002 against Indiabulls Housing Finance Limited and its employees for violation of the provisions of Section 3 and 4 of the Act.
It is stated that Informant had availed Home Loan from Indiabulls Housing Finance Limited vide Loan Agreement dated 21st June 2018 for INR 1,00,00,000 (Rupees One Crore only) at a rate of interest of 8.75% p.a. repayable in 240 equated monthly instalments of INR 88,372 (Rupees Eighty-Eight Thousand Three Hundred and Seventy Two only).
Informant stated that Indiabulls Housing Finance Limited increase the rate of interest from 8.75% p.a. to 8.95% p.a. vide email dated 21st August 2018. Thereafter, vide separate emails dated 30th September 2018 and 29th November 2018 informed that rate of interest would be increased to 9.70% and 11.15% p.a. respectively. Informant vide communication dated 30th November 2018 expressed his concern regarding increase in rate of interest and not to encash the undated and unfilled cheques and to not execute the Electronic Clearing Service authorization. However, they presented an ECS for INR 1,01,854 (Rupees One Lakh One Thousand Eight Hundred Fifty-Four only) on 5th December 2018 instead of the authorized ECS of INR 88,372 (Rupees Eighty-Eight Thousand Three Hundred and Seventy-Two only). Further, Informant alleged that Indiabulls Housing Finance Limited had forced him to sign a number of papers and Loan Agreement does not mention either about the frequent revision of interest rate or that they are authorized to revise the rate of interest exorbitantly. Also, Indiabulls Housing Finance Limited misused blank ECS authorization.
Informant has alleged that Loan Agreement consists of clauses which have an appreciable adverse effect on competition in India and contravene the provisions of Section 3 of the Act. Further, it is alleged that despite the drop in the market rate of interest by the RBI, Indiabulls Housing Finance Limited is not willing to reduce the rate of interest which is due to its dominant position and hence is violation of Section 4 of the Act.
CCI observes that the main grievances of the Informant was in reference to the increase in rate of interest charged by Indiabulls Housing Finance Limited on the home loan. Hence, CCI states home loans is distinct from other types of loans. In addition, even the banks and home finance companies have extend home loans and compete with each other for providing home loan services. Therefore, CCI does not deem it necessary to distinguish between home loans offered by various lending entities. Accordingly, CCI states that the relevant market in the instant matter is delineated as ‘market for provision of home loans in India’.
Further, CCI observes the housing finance market in India is fragmented, with 80-plus players. In addition, as per the annual report of Indiabulls Housing Finance Limited, they only have share of 1.37% in the housing loan market. CCI holds that, “considering the large number of players operating in the relevant market which suggests that not only the market is competitive in nature but also that OP-1 does not seem to have the ability to operate independently of the competitive forces, OP-1 is not found to be dominant in the relevant market”.
Hence, Indiabulls Housing Finance Limited cannot be termed as dominant player. Therefore, in the absence of dominance there is no issue of abuse of dominant position. Further, Commission, in the absence of evidences, could not find anything against Indiabulls Housing Finance Limited to suggest contravention of Section 3 of the Act.