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  • SBI’s Possession Guarantee Scheme

    SBI Possession Guarantee Scheme

    State Bank of India’s ‘'Residential Builder Finance with Buyer Guarantee Scheme’' provides buyers with a guarantee that the project will be completed on time and that they will have possession of the residence within the project’s scheduled deadline.

    RERA Guidelines

    The Real Estate Regulation and Development Act (RERA) had issued guidelines in order to protect the interests of home buyers from delays in getting possession of houses or flats that they had paid for already due to stalling from real estate developers.

    Builders are now mandated by RERA to provide a specific date to buyers by which the project will be completed and ready for possession. However, extraordinary circumstances that are beyond the control of the builder is taken into account which can still result in delays in handing over the flat to the buyer.

    Delays in obtaining possession of the desired house or apartment can result in financial challenges for buyers, especially if they have availed a home loan in order to buy the property. When there is a delay, they not only have to start paying the Equated Monthly Instalments (EMIs) of the home loan, which will run into thousands, but also most probably have to continue paying the rent on the property they are currently residing in, if it is not their own.

    SBI Residential Builder Finance with Buyer Guarantee Scheme

    This is a special scheme that aims to provide a guarantee to the buyers of under-construction properties that they will receive the property on the date promised by the developer. The date of possession that is taken for reference is the date that is provided in the RERA registration documents of the project in question.

    If the project’s occupancy certificate is not provided by the given date and the construction is not completed by that date by the developer, then the borrower will be refunded the entire amount, including the margin money, by SBI.

    Eligibility Criteria for Projects for the SBI Scheme

    Some of the major eligibility features for projects to come under the SBI scheme are as follows:

    • A major feature of the SBI scheme is that a project has to be registered under RERA in order for the scheme to be applicable. For projects to be registered under RERA, it has to have more than eight units with the area to be developed being more than 500 square meters. A project can only be registered under RERA if these two factors are applicable to it.
    • Another feature of the scheme is that only residential properties are eligible for it, which means that commercial properties cannot be added under it.
    • The upper limit for the cost of the property is Rs.2.5 crore. Properties that cost more than this threshold price will not be eligible for the SBI scheme.
    • Only selected projects which have a mutual agreement between the developer and SBI will be eligible for the scheme.
    • It is currently available only in 7 cities across India but will soon be expanded to include other cities and towns as well.

    Benefits of the SBI Scheme for Buyers

    Buyers benefit from the SBI scheme in the following ways:

    • They are assured that they will receive possession of the property within the specified deadline
    • There will be no financial losses for buyers due to delays in possession of the property
    • Buyers can choose from a wide range of real estate projects that are in partnership with this scheme offered by SBI
    • Buyers can avail home loans from SBI for these specific projects which will ensure that there is no delay in future

    Benefits of the SBI Scheme for Real Estate Developers

    Real estate developers benefit from the SBI scheme in the following ways:

    • They are likely to attract more buyers to their real estate projects because of the guarantee provided to them under the SBI scheme
    • They can alavail a loan from SBI ranging from Rs.50 crore to Rs.400 crore providing they have a good CIBIL score and meet the other terms and conditions of the bank

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