Dear Virat Kohli,

Recently there was news in media that Punjab National Bank (PNB) has signed you as their brand ambassador. This was probably done to boost their image in public and also having an eye on their upcoming IPO of housing finance entity aka PNB Housing Finance Limited (PNBHFL). As a business entity it is their right to sign up anyone they seem fit to promote their business and as an individual you are within your rights to be associated with any business you feel convinced.

You are a celebrity in your own right and that too a youth icon, not just in India but also all over the world. People heed to what you say, do or support. Youth try to follow your every step and get swayed by what you do or endorse. That puts a huge responsibility on your shoulder to carefully choose what and whom you endorse. It is tantamount that you know all the details of the business or product you endorse.

In this context it is important for you to know that Punjab National Bank (PNB), through it’s housing finance subsidiary PNBHFL, has in collusion with some real estate developers been deceiving gullible customers for the past few years. PNBHFL & some reputed real estate developers in the country, such as Mantri Developers Pvt Ltd (MDPL) and Pashmina Developers, have launched ‘subvention’ scheme for a few projects launched in past few years.

In this subvention scheme, the buyer books the property by paying 20-25% of the property cost upfront. The rest is paid by the bank (PNBHFL in this case) to the developer upfront in the form of a loan to the buyer. The developer agrees to bear the interest cost till possession or for a fixed period mentioned in the buyer seller agreement. In some cases the developer also assures the buyer that he will return 2x of the customer’s contribution in three years time and close the loan with the bank if the buyer does not intend to retain the property. Since such schemes were floated in the market by leading real estate developers and backed by a nationalized bank like PNB, hundreds of customers including me invested in this scheme.

Virat - you must be thinking what is wrong with such schemes especially when there is a tripartite agreement between developer, buyer and bank on the terms and conditions. Well it came to our attention later that first of all such subvention scheme where the loan is disbursed upfront by the bank to the builder is not recommended by Reserve Bank of India (RBI). RBI, in 2013, has issued an advisory  (RBI Advisory) and warned all banks and financial institutions against such ‘innovative’ housing finance schemes. Further RBI has provided a detailed explanation how such schemes can be detrimental to end customers besides the financial institutions themselves. Unfortunately PNB, through its housing finance subsidiary PNBHFL (where it has 51% stake) has not only ignored the advisory from RBI but also kept the home buyers in such schemes in dark up until now. To make things worse, they are continuing to offer these subvention schemes and disbursing loans upfront to builders even now despite the RBI advisory.

Second, the builders have stopped bearing the interest cost of the loan and for few buyers the builder did not return the 2x of their contribution even when the buyers did not intend to retain the property - both of which are clear breach of contract in the buyer seller agreement . As of August 2016, the builder hasn’t paid interest for more than 6 months to the buyers. The builder has also delayed the possession date by 2-3 years from the original dates. Because the entire loan was disbursed upfront by PNBHFL, as law-abiding citizens the buyers are left with no choice but to keep paying the entire loan interest to PNBHFL for a property that’s not yet fully constructed, often taking personal loan or borrowing from family/friends at higher cost. That’s a huge drain on any middle class citizens’ finances. Even after bringing this to attention with the developer and bank several times, neither the builder nor the PNB seem to care.

Virat - the buyer group primarily consists of salaried people who have purchased flats as budget homes and some retired people who have purchased for retirement plans. The buyers are now running pillar to post pleading with the builders to release our bank interest on time and clear the past dues. The builder has turned deaf to our requests giving frivolous reasons justifying their misdeeds, We also requested PNBHFL to persuade the builder to honour their commitment and pay the buyers the interest on time or defer the interest payments of the buyers until the builders mend their ways so it can provide some temporary relief to us. Surprisingly, PNBHFL is not of much help to the buyers for some strange reasons and seem to be more supportive of the misdeeds of the builders. This has put all of us honest, hard working, taxpayers at risk of defaulting on our interest to the bank  and risking our credit history.

To rub salt to our wounds, PNB has been bestowing excellence rewards to these builders and their management team in recent times which makes us wonder if there is some sort of collusion between PNB and these builders to keep promoting such subvention schemes in the market and deceive gullible customers

Virat - you might recall that just few months back, MS Dhoni, who was the brand ambassador for one Amrapali Group builders, took a firm stand in favor of the buyers when he became aware of the unfair practices of the builder who took it’s customers for a ride.

Hence we humbly request you to please rethink your association with Punjab National Bank as you are indirectly supporting their unscrupulous ways to do business. While we fully understand that we cannot dictate what you do or how you conduct your business transactions, but we can only request you to please stand with your fellow Indians and act against such company that indulges in anti people business practices. This decision might hurt you financially but I am sure it will earn you lot of goodwill, not only from us buyers who are directly impacted but also lakhs and lakhs of honest Indians.

Jai Hind