All the builders and developers who had been planning to surpass the Real Estate Regulation Act (RERA) have very less time left in their hands because banks have taken the decision of not sanctioning loans to projects which are not registered under RERA, in discussion with the Reserve Bank of India.
There has to be a security check in the entire process and when RERA is especially implemented to throw out the unreliable builders, the decision has been taken to not sanction any kind of loans to projects not registered under it.
Banks have also started inviting additional collateral as warranties while sanctioning loans to real estate developers.
The banks are extremely anxious because if they even extend loans as per the law, their loan will not be protected. If their loan turns into a bad one, the customers are bound to get a refund while the banks have not been provided with any protection under the law.
Not seeing any kind of guarantee, the banks are being very cautious and alert in lending to builders.
Under RERA, it is mandatory for every developer to keep 70% money taken from homebuyers in a different account. By doing this, they will be left with just 30% of the proceeds to be utilized for any other use. Earlier, they could use the entire 100% amount for other uses.