Home loan customers will get Refund if project is delayed by builder

State Bank of India, the biggest lender of India has launched a scheme where the home loan customers would get a refund if the Builder delays the project.

The scheme would be eligible on the apartments where the sole lender should be SBI only. “This scheme will serve the purpose of boosting the stressed real estate sector and will give confidence to buyers as well,” said Rajnish Kumar, chairman, SBI.

Kumar said that these loans will be of same rate which are of existing home loans and borrowers can seek a refund if the builder fails to meet the deadline under the Real Estate (Regulation and Development) Act. It is required for builders to get their project registered under RERA and declare a timeline for its completion.

The Reserve Bank of India (RBI) has always seen commercial real estate exposure by banks as a risky affair compared to other segments. Therefore it has made it compulsory for banks to keep a standard standard provisions of 0.75-1% for these loans. Typically, banks have to keep 0.4% of a loan as provisions for most other loans.

Due to the economic slowdown, real estate market has seen a down which requires more demand in second half of the year.  According to data from ANAROCK Property Consultants Ltd, sales in top six cities, including Mumbai Metropolitan Region, National Capital Region and Bengaluru, fell 22% in the second half, compared to the first six months of 2019. However, sales in 2019 saw an increase of 5% year-on-year to 261,370 units in the cities cited above.“This product has huge implication on real estate industry and homebuyers. It will improve the velocity of sales,” said Kumar.