RBI needs to require that all real estate lending contracts have a clause prohibiting lenders from advancing money to any borrower (developer) who discriminates
Through the variable reverse repo, RBI will also manage the lower end of the curve suitably.
All of us are prejudiced against something/someone or another. After all, prejudice is just perception multiplied by a lack of experience, aided and abetted by sometimes virulent media. I lived in the US for 15 years in the mid-1970s and 1980s, and though I was—or thought I was—a quintessentially cool, liberal, artist-type, I had only one black friend, in the sense that I knew and spent time with his family. There were maybe a dozen others with whom I’d had a drink or whatever, and perhaps another similar number with whom I had a passing acquaintance—very, very far from the 13-14% composition of black people in the US population.
Today, the US is much more integrated than it was back then, so my alter ego in the US right now would likely have far more connections with African-American (not black, these days) people. But even this is still a long, long way from even an acceptable level of prejudice—if there is any such thing; nonetheless, years of affirmative action have made a difference, and the current post-Trump generation is engaged with accelerating this change.
In India, of course, it’s a much, much bigger job. Here, too, growing activism by both young, modern people and people who have been working for change for decades, as well as, more recently, farmers, women, Dalits, Muslims, and citizens who are really upset with how the social environment has deteriorated, is having an impact. But it is a long grind.
Structurally, the constitution prohibits discrimination on the basis of religion, caste and gender, but this only applies to the government and government entities. For private individuals or business entities, there is no legal prohibition against discrimination in terms of providing jobs, housing or even conducting normal business unless discrimination is against citizens belonging to scheduled castes (Dalits) or scheduled tribes.
This is different than in, say, the US, where private individuals can be hauled up if they discriminate on the basis of race, religion, sexual preference, etc, even in the normal course of business. I read a report a few years ago where an elderly couple in a small town in Idaho was prosecuted for not renting out their function hall for the wedding of a gay couple, despite homosexuality being against their Christian beliefs. I could understand the anguish of the elderly couple, but the law was the law, and they were charged and fined.
This should be our goal in India, too.
A critical starting point, particularly given our huge diversity, is that we need people of different religions and castes to meet each other more, live amongst each other, become neighbours. Throughout our history, neighbours of different religions and caste have come together to celebrate festivals and often—love jihad be damned—marrying one another. Most importantly, inter-faith or inter-caste neighbours help out in difficult times. Even in the darkest days of partition, Hindus and Muslims on both sides of the border helped each other; my darling departed (Hindu) mother-in-law, who came to Bombay from Karachi during partition, often spoke about how her Muslim neighbours had helped them while the muhajirs who had come across the border were the ones who made life difficult. Every horrifying communal or caste-based riot since then has thrown up stories of communities helping one another through the trauma. Being neighbours means being good neighbours. Thus, we need to begin the push to strengthen our society by focusing on integrating housing.
There are many people in India, as, indeed, all over the world, who prefer to live amongst their own, which is understandable. This leads to a market “demand” where builders quietly suggest to potential Muslim or Christian, or Dalit buyers that “this is a vegetarian building; it’s not for you”. To my mind, this is not only immoral but also anti-national since it keeps the fabric of our society from getting stronger, limiting both our development and growth in every way. More importantly, though, this discrimination based on diet (since it discriminates against Dalits) is against the law.
To address this, RBI needs to require that ALL real estate lending contracts have a clause prohibiting lenders from advancing money to any borrower (developer) who refuses to sell a flat to any person because of their dietary habits since it would be illegal under The Protection of Civil Rights Act (1955) and the corresponding rules (1977); indeed, even questionnaires inquiring about the same would be illegal. Operationally, to ensure some daylight on this issue, RBI’s annual audit of lenders needs to be tweaked to enable it to monitor these potential crimes.
I understand that on the face of it, this does not seem to speak to RBI’s mandate; however, there is little doubt that as a regulator of lending, one of its fundamental jobs is to ensure that public monies are not lent to people (or entities) that break the law.
There will doubtless be some fall-out from builders fearing a slowdown in sales, but once the law is enshrined in the regulations and discrimination in housing is widely acknowledged as against the law, the market will revert to its normal state. And, critically, this will be a key first step towards fundamental long term change in Indian society.
The author is CEO, Mecklai Financial. www.mecklai.com