State Bank of India on Wednesday launched the Residential Builder Finance with Buyer Guarantee (RBBG) scheme which states that the lender will refund the entire amount if the developer/builder fails to deliver the project within the promised deadline. The scheme will be valid only if the builder provides an occupation certificate.
This scheme can be availed for projects where the maximum home price goes up to Rs 2.5 crore. For developers who have successfully been fulfilling the prescribed due diligence criteria by the bank can also avail loan from Rs 50 crore to Rs 400 crore under the scheme.
Looking at the recent issues faced by home buyers in areas like Noida, where the builders usually fails to deliver the project, this is the best initiative which can help these potential buyers to gain back their trust in the industry and will for sure have a huge impact on both the builders and the buyers.
Looking at the statistics, sales in top six cities including Mumbai Metropolitan Region, National Capital Region and Bengaluru, fell 22% in the second half when compared to the first six months of 2019. Even though sales in 2019 saw an increase of 5% annually, the numbers could still grow if the trust of home buyers is regained.
Efforts to improve the struggling real estate sector have been made on multiple levels. Recently the Central Government of India had announced setting up of an Rs 25,000 crore Alternative Investment Fund (AIF) which aims at providing some relief to developers with unfinished projects to ensure delivery of their projects on time. Similarly, last month SBI also cut their lending rates to 7.9% as compared to 8.15% earlier, which fetched a very positive reaction from the market.
Initially the scheme is set to cover 10 cities and their projects which will expand later. The scheme has already been initiated with Mumbai-based Sunteck Developers for their 3 upcoming projects in the Mumbai Metropolitan Region. This scheme is sure to bring some velocity of sales in the real-estate sector.