New Delhi: State Bank of India, the country’s biggest lender, earlier this week launched ‘Residential Builder Finance with Buyer Guarantee (RBBG)’ with an aim to safeguard homebuyers’ money invested in the housing project. Under this scheme, SBI will issue guarantee to customers availing home loans on projects which are completed. This would help homebuyers in securing their investment in ongoing housing projects financed by the bank.
The new home finance product, called RBBG is focused on affordable housing segment with home prices up to Rs 2.50 crore in seven cities in India.
Reputed builders who match the criteria fixed by the bank can avail loan between Rs 50 crore to Rs 400 crore from SBI. The standard criteria for availing this loan include star rating and CIBIL score.
“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. Based on the response from both builders and customers, we may consider extending this product to other parts of the country,” SBI chairman, Rajnish Kumar said.
SBI has tied up with Sunteck Realty for three projects in Mumbai on Wednesday. The bank expects more such tie-ups with builders in the near term.
Under this scheme, all the cash of the builder, be it disbursements and receipts, will remain in an escrow account. Even if the company is taken to bankruptcy court, all the payments will be made from the escrow account.
The good thing is that SBI will not charge any additional interest to the home loan borrowers for providing this insurance. The cost of insurance is covered by an agreement with builders.
Based on the response to this newly launched product, SBI will extend the scheme to other cities as well.