In a bid to protect home buyers’ interests, the State Bank of India (SBI) on Wednesday launched Residential Builder Finance with Buyer Guarantee (RBBG), a scheme through which the public sector lender will issue guarantee for completion of housing projects to customers availing SBI Home Loans.“RBBG will focus on affordable housing segment with home price of up to Rs 2.50 crore in seven Indian cities initially,” a statement issued by SBI said.
It added: “Under this product, all reputed builders fulfilling the prescribed criteria by the bank can avail loan between Rs 50 crore to Rs 400 crore. Criteria includes Star rating and CIBIL score.”
The real estate sector in the country has been burdened by financial stress in recent years and has seen many of the companies go under, making housing projects a precarious investment for home buyers.
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Announcing the launch of the initiative, SBI chairman
Rajnish Kumar said: “We believe that RBBG will build confidence among home buyers by securing their hard-earned money and at the same time will boost under-stress real estate sector.
“This product is yet another effort by SBI to make affordable housing conveniently accessible to the individuals with dreams of owning their desired home. Based on the response from both builders and customers, we may consider extending this product to other parts of the country.”
RBBG will carry the tagline “Aapka bharosa SBI ka.”
Anuj Puri, chairman at ANAROCK Property Consultants, said that the move is a positive for the real estate industry and will help attract home buyers. He added that under the scheme SBI will work with the most reliable developers, ensuring protection for the buyers.
"This is definitely a good move and positive for the residential real estate sector as a whole. It will certainly help attract homebuyers. The underlying provision of this scheme – that the bank commits to refund the principal loan amount if a developer fails to complete the project — will ensure that SBI remains highly selective in its approach and work only with the most reliable and trustworthy developers.
"To mitigate the risk of having to issue refunds, it will also keep a regular check on the progress of the project and see to it that it is completed on time. This will eventually give major assurance to all home buyers who will apply for loans under this scheme from the "The unique scheme has all the hallmarks of becoming a major success."
SBI, and help in boosting their confidence.