Banks to not provide loans to builders without RERA listing

RERA came into effect from May 1 this year, and the builders were given three-month time to register their new and ongoing projects with their respective state laws.

Banks, in consultation with the Reserve Bank of India, have decided not to extend loans to the real estate projects which are not registered under RERA.
 
"We have to look for some security mechanism, and since RERA is designed to weed out fly-by-night operators, we have decided not to extend credit to projects not registered with it," a bank official was quoted as saying, who did not wish to be identified.
 
While disbursing loans to the real estate developers, banks will also ask for additional collateral, including on personal properties of promoters.
 
The real estate industry body, Credai, has been asking developers to register under RERA, but the registration has not been encouraging so far.
 
"We are very apprehensive because even if we disburse loans as prescribed under the law, the way it is designed, it does not protect our credit. If a loan turns bad, customers will be refunded but there’s no inherent protection for us under the law," said a PSU bank official, as quoted by ET. 
 
"So, we are being extremely careful about lending to the sector."
 
RERA came into effect from May 1 this year, and the builders were given three-month time to register their new and ongoing projects with their respective state laws.
 
Source: ET

Event date: 
Tuesday, August 8, 2017

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