Posted on: August 8, 2017

Banks Will Not Extend Loans on Projects Not Listed under RERA

Banks Will Not Extend Loans on Projects Not Listed under RERA
In a move to support RERA, banks have decided not to extend home loans to projects that are not registered under the Real Estate (Regulation and Development) Act. These are the times when fraudulent builders and fly-by-night real estate promoters are trying to find loopholes in the regulation. Hence, banks are taking extra care to safeguard the customers’ interests.

 

According to a report, an official from a renowned PSU Bank said that RERA protects the interests of home-buyers but it does not secure the banks’ credit. In case a builder or promoter commits a fraud and the loan turns bad, there is a provision under RERA to refund the customers but no protection is given to the banks with respect to the loan granted. Hence, it is only sensible for the banks to be apprehensive when granting credit for real estate projects.

Some banks have started seeking additional collateral from unregistered developers and promoters, sometimes including their personal properties.
RERA requires developers to register all their projects under the act and follow other specified provisions.

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