The scheme, under which a property buyer paid only 10% of the property cost at the time of booking and 90% at the time of possession, was the buzz during the festival season. However, it was felt that such loans were risky for banks and so the Reserve Bank of India (RBI) stepped in and tightened the provisioning norms for such loans. Builders such as Indiabulls Real Estate (IBREL), Lodha Group and Nahar Group are among those to have floated this scheme.
Analysts said banks were rejecting loans because buyers failed the eligibility norms. Less than a sixth of the loans for such projects were getting passed, an analyst said. Bank approval rates for these loans have fallen steeply since then, because of which it is the builders who are now staring at possible cancellations.
The average cost of the 3000-4000 sq ft flats was Rs10 crore and a tenth of the buyers did not opt for the 10:90 scheme.The problem with the 10-90 scheme is also that developers agree to pay interest only till the construction is completed.If the developer is selling property claiming it would undertake interest subvention for that period, then the buyer should ensure that mentioned clearly in the agreement.
Banks have also become wary of giving out such loans because their regulator, the Reserve Bank of India, looks down upon such lending practices. So Builders face cancellations as 10:90 loans dry up
Source: DNA India
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