State Bank of India (SBI) on Wednesday launched a new scheme for its home loan customers under which it offers guarantee of the completion of the residential project within the stipulated deadline, else it will refund the entire principal amount paid to the developer.
The ‘Residential Builder Finance with Buyer Guarantee’ scheme will apply on real estate projects which are solely funded by SBI and where the homebuyer has also taken loan from the lender. All reputed real estate builders fulfilling the prescribed criteria, which includes Star ratings and CIBIL score, can avail of loans between Rs 50 crore and Rs 400 crore under the scheme.
“We are making an arrangement with select builders. State Bank is committing that till OC (occupation certificate) is given, there will be a guarantee, which will be offered to the buyers who take home loans from SBI,” said Rajnish Kumar, chairman of SBI.
The scheme aims to safeguard the interest of homebuyers by financially protecting them from a situation where their money gets stuck in unfinished stalled projects. This has been a common issue crippling the real estate sector of late due to the liquidity crunch faced by developers. “This product has huge implication on real estate industry and homebuyers. It will improve the velocity of sales,” said Kumar.
The Residential Builder Finance with Buyer guarantee scheme can be availed for projects where the maximum home price is up to Rs 2.5 crores. Initially it will be available in seven cities and will be later extended to a total of 10 geographies.
Under the scheme, SBI has signed its first agreement with Mumbai-based Sunteck Realty Ltd for three projects to be constructed in the Mumbai Metropolitan Region.
SBI had recently announced that new home loan borrowers can avail loans starting at 7.9% compared with 8.15% earlier after the lender slashed its external benchmark rate by 25 basis points to 7.8%.