the higher risks associated with such lump-sum disbursal of sanctioned housing loans and customer suitability issues, banks are advised that disbursal of housing loans sanctioned to individuals should be closely linked to the stages of construction of the housing project and upfront disbursal should not be made in cases of incomplete housing projects.”
Tata Housing MD and CEO Brotin Banerjee welcomed the move and said, “RBI’s directive will act as a deterrent to builders who collect a huge corpus from banks and delay construction for no apparent reason. This move will also safeguard banks’ credit risk."
Mantri Realty CMD Sunil Mantri also said it was a positive move. “If the developer is investing 80% from his own corporate kitty, there is no problem, but that does not happen. In case where the customer has availed a bank loan, that 80% is taken by the developer under the customer’s name from the bank as lump sum disbursal and if no construction has happened, the end use of those funds may be misappropriated. The loan availed by the developer is at much lower rate since it is in the name of the individual, but if the obligations are not met it is the buyer who suffers.”
Parsvnath Group chairman Pradeep Jain agreed and said, “It will help streamline the sector and will curb delayed deliveries of projects. This will also restrict developers from diverting the 80% of loan amount to other project.”