To facilitate a higher credit flow of individual housing loans, the RBI has extended the rationalized home loan norms by another year till March 31, 2023. It has been done recognizing the importance of the housing sector and its multiplier effects.
The pandemic damaged economies all across the world and put an end to global trade. One of the worst-affected industries in India was the real estate sector. It is predicted that the new RBI home loan guidelines will boost the housing sector and encourage more home purchases.
However, according to the RBI home loans norms, banks must take into account the following RBI guidelines when establishing their policy criteria to make sure that bank financing is exclusively used for productive and construction purposes and not for activities related to real estate speculation. The top builder in Pune is all about who can benefit from RBI’s guidelines for house loans.
Land acquisition under RBI’s Home Loan Guidelines
The bank may approve a loan for the acquisition of the real estate if the borrower confirms in writing that he intends to use the funds provided by the bank to acquire the property in question and build a residence therein within a certain timeframe. However, banks should receive a copy of the construction design that has been formally approved and issued by a competent authority before issuing any loan. It is necessary for the borrower to obtain an “affidavit-cum-undertaking” to guarantee that they strictly follow the agreed plan. According to RBI guidelines for housing loan disbursement, a bank-appointed architect must certify that the proposed development closely complies with the authorised plan.
Home purchasing or construction under RBI’s Home Loan Guidelines
- Residential units can be bought or built by individuals utilising “per family” bank loans.
- Let’s say someone owns a house in their name with the intention of living there. Banks might then offer financial support to buy or build a second house in the same town or city.
- If provided office space or an out-of-station posting, a person may submit an application for a bank loan to purchase a property they wish to rent.
- Banks may offer loans to those who want to purchase an old home that they now rent.
- Banks may lend money directly to slum dwellers (with the government serving as a guarantee) or indirectly for the purpose of constructing upgrades to their living conditions.
- However, the following circumstances should not be covered by bank financing:
- Buildings shouldn’t be constructed by banks only for residential usage.
- Projects carried out by non-corporate public sector bodies may not be financed by banks.
- In the past, banks had approved term loans for government-created organisations, such as the State Police Housing Corporation, to construct housing for employees. The loans were supposed to be paid back using planned money.
Providing funds to intermediary housing organizations
Financing for land acquisition
Banks may give funding to public agencies rather than private builders for land acquisition and development as long as it is part of a larger project that includes the development of infrastructure such as water systems, drainage, roads, and so on. Term loans could be utilised to extend this credit. If the project involves the construction of residences, the terms and conditions for the credit given to individual beneficiaries would be the same as those for directly financing the beneficiary.
Banks should have a board-approved property valuation policy in place, including accepted collateral for their risks and the requirement for appraisal by independent valuers with professional credentials.
Lending to housing finance institutions
Banks may make term loans to home finance companies based on their (long-term) debt-to-equity ratio, track record, success, and other relevant factors.
Financing to housing authorities and other non-profit groups
State-level housing boards and other governmental bodies may be eligible for term loans from banks. To develop a stable housing finance system, banks must additionally state that the Boards would focus on ensuring regular retrieval of loan payments from beneficiaries, in addition, to taking into account these agencies’ historical performance in terms of recovery from beneficiaries.
Banks provide long-term bonds to finance affordable housing.
Under the conditions described in the circular “Issuance of Long Term Bonds by Banks- Financing of Infrastructure and Affordable Housing” and similar circulars, banks can issue long-term bonds with a minimum maturity of seven years to raise funds for lending to affordable housing.
Conclusion
Thus we see the RBI’s home loan guidelines will benefit the real estate sector, including the buyers.
Sukwani Constructions, the top builder in Pune, follows all the norms set by the Government of India. We are a reliable real estate developer in Pune with an experience of over 30 years in the same sector. We have spread happiness among our customers by providing them with comfortable, luxurious homes and commercial places with top-notch facilities and amenities in the Pimpri Chinchwad region.
If you want to invest in real estate in Pune, look for our ongoing projects.
