CHENNAI: Planning to apply for a home loan? Make sure your builder complies with Centre’s new rules, else your loan amount may not be cleared. Banks have decided not to approve loans for projects that do not comply with the Real Estate (Regulation and Development) Act 2016, even in states like Tamil Nadu that are yet to implement it.
While the State Bank of India has issued a circular to this effect, others are expected to follow suit. The SBI has given a checklist to loan processing officers to ensure approvals are given only to projects that comply with the Act. The checklist includes ensuring the project is registered with Real Estate Regulatory Authority set up under the Act, to find out whether the promoter has legal title to the land on which development is proposed and if project land is free from all encumbrances.
The bankers should also check whether the promoter has opened project specific separate account with a scheduled bank and submitted the insurances of land and building of the real estate project. For states where RERA has been implemented, real estate loans will be sanctioned only after getting the registration number is issued by the regulatory authority.
Bank guidelines for sanctioning of loans
Monitor regularly whether the promoter has deposited 70 per cent of amount realised for real estate project with RERA
Promoter could withdraw amount to cover the cost of the project in proportion to the percentage of completion after it is certified by engineer, an architect and chartered accountant
The promoter has to get his accounts audited by a chartered accountant within six months after the end of every financial year
Housing loan applications will only be approved if the project complies with all requirements of the Real Estate (Regulation and Development) Act (RERA), 2016, as per a recent circular issued by the State Bank of India. Tamil Nadu, like some other States, is yet to implement RERA.
For ongoing projects wherein the loan has been partially disbursed or the project is already approved prior to May 1, 2017, bank officials have to ensure that the project is RERA compliant and also that the registration number is obtained by July 31, 2017.
For ongoing projects launched prior to enactment of RERA, reviewed specifically for ascertaining compliance, the same may be recorded in home loan appraisals instead of attaching RERA checklists to each proposal.
Banks are now wooing builders and developers to open escrow accounts with their branches. These accounts will not have the cheque book option.
“These guidelines brought in by the bank would bring in discipline as well as transparency in the realty sector,” T Chitty Babu, national chairman of Confederation of Real Estate Developer’s Association of India (Best Practices) as well as chairman and managing director of Akshaya Homes, told Express.
Hoping that RERA will be implemented in the State by next month, Babu said it would also bring in a level playing field, as projects can’t be advertised until they’re registered.
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