State Bank of India, the country’s largest lender, has announced a new product which provides completion guarantee for particular residential projects.
The lender will refund the amount to the home buyer which was paid to the developer if occupancy certificate for the project is not received within a particular time-frame.
The scheme — Residential Builder Finance with Buyer Guarantee (RBBG) — is applicable to home loans from SBI for certain projects that will be identified by the bank.
The scheme will focus on the affordable housing segment with home price of up to ₹2.50 crore in seven Indian cities initially, and will be extended to 10 cities, Rajnish Kumar chairman, SBI, said at a press conference.
“Under this product, all reputed builders fulfilling the prescribed criteria by the bank can avail loan between ₹50 crore and ₹400 crore,” he said.
The time-frame for the completion of the project will be as per the date specified by the respective State government’s Real Estate Regulatory Authority (RERA).
“We believe that RBBG will build confidence among home-buyers by securing their hard-earned money and at the same time will boost the real estate sector that is under stress,” Mr. Kumar said.
He said the scheme would give home buyers the confidence to buy properties. “The velocity of sales is expected to double,” he said.
SBI and Sunteck Realty Limited (SRL) have entered into a Memorandum of Understanding (MoU) for the purpose. SBI aims to enter such an agreement with other developers also.
SBI’s home loan growth during the nine months of the financial year was 17%.
