The Reserve Bank on Thursday made it mandatory for builders borrowing funds from banks to disclose their loan details to the home buyers.
The RBI has issued directions to banks to include the disclosure clause in their loan agreement with the builders, pursuant to a recent Bombay High Court order.
“While granting finance to specific housing/development projects, banks are advised to stipulate that the builder/developer/company would disclose in the Pamphlets/ Brochures, the name(s) of the bank(s) to which the property is mortgaged,” RBI said in a notification.
A builder would have to publish loan details in advertisements given in newspapers or magazines, and also mention that it has a no—objection certificate from mortgagee banks for sale of the property, it said.
“Banks are advised to ensure compliance of the above terms and conditions and funds should not be released unless the builder/developer/company fulfills the above requirements,” the notification added.