Residential Builder Finance with Buyer Guarantee (RBBG)
State Bank of India introduced a home buyer finance guarantee scheme to safeguard the interest of home loan buyers. Under this scheme, the bank will refund the entire borrowed principal amount to the borrower in case the builder fails to deliver the project within the deadline (as per the agreement). SBI Chairman Rajnish Kumar added – the scheme will “improve the confidence of homebuyers” and increase the velocity of residential unit sales.
When a developer fails to deliver the project on time, a borrower still has to continue paying the EMI towards the home loan which they have availed. This puts a lot of financial burden on the borrower as they have to continue paying money for their rented house and EMI for the unpossessed house at the same time. This leads to an increased financial burden as most people can’t afford to pay both at the same time. This scheme can prove to be a relief for such a buyer as it guarantees to refund the borrowed principal amount when the completion of projects fails to the customers availing SBI Home Loans.
Previously there was no such scheme by the bank and in such a situation, borrowers were in great financial loss. However, with the new scheme introduced, there will be a certain amount of guarantee (principal amount) on unfinished & undelivered projects. But still, the borrower has to forego the down payment, taxes paid and interest for the paid EMIs as well. But this is surely better than having nothing.
Residential Builder Finance with Buyer Guarantee (RBBG) aims to focus on the affordable housing segment with a home price of up to ₹ 2.50 crore in projects approved by SBI in seven Indian cities initially. The plan is to further extend it to other cities of the country in the near future. Under this, presumed developers satisfying the recommended criteria, including Star rating and CIBIL score, can benefit credit between ₹50 crore to ₹400 crore.
Considering all these things, SBI will presently need to assess forthcoming developers essentially on the quality of the organization’s accounting report, incomes, and reputation. So, after considering all these together thusly a Real Estate builder will get a stamp approval by SBI.
Well, the fact is if a developer does not deliver a project on time, homeowners often have to bear the pain. But through this scheme, now onwards SBI has to take care of the homeowner instead. So effectively the scheme will bring new hope to SBI home loan borrowers as they will not get cheated for the delivery of the project and get possession of their dream house.