The State Bank of India had introduced the Residential Builder Finance with Buyer Guarantee Scheme or RBBG Scheme to protect home buyers against non-completion of projects. This is a big problem for the real estate industry in India. If you are buying a house and are not sure of getting it, why would you put hard earned money in a house? To solve this problem, SBI launched the RBBG Scheme.
SBI launched the Residential Builder Finance with Buyer Guarantee Scheme to issue a guarantee on the completion of select residential projects for SBI Home Loan customers. The RBBG Scheme would be launched in 10 cities and include only affordable housing projects which are priced up to Rs 2.5 Crores. Even if it’s a RERA registered project, once past the RERA deadline, it’s considered stuck. SBI offers the guarantee till the project gets the occupancy certificate (OC) if you avail an SBI Home Loan. This promises to be a win-win for buyers, builders and the bank. Sadly, the RBBG Scheme has its share of flaws and let’s take a look at some of them.
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If you have already availed an SBI Home Loan then you cannot get the benefits of SBI RBBG Scheme. If your project is not associated with the bank, you can’t get the benefits of SBI RBBG Scheme. There are other problems like builders risk, project quality and so on.
The SBI RBBG Scheme doesn’t apply to all the real estate projects which are financed by SBI. You get to choose projects only in SBI approved projects at 7 cities. These cities are Hyderabad, Bengaluru, Pune, Kolkata, NCR, Mumbai Metropolitan Region and Chennai. The scheme is available only at select branches of the SBI at its Corporate Client Group (CCG).
The SBI RTTG Scheme currently has just one developer on board. This is the Sunteck Realty pilot project. (A Mumbai-based real estate development Company). So to get the benefits of SBI RTTG Scheme you would have to get a SBI approved project in just 7 cities and currently there’s just one project.
The SBI RBBG Scheme is only for under-construction housing projects. The entire project must be financed by the State Bank of India. You don’t get the SBI RBBG benefit on buying projects financed by multiple lenders. So, you don’t get the benefit of SBI RBBG Scheme even for the SBI-approved projects in these 7 cities, if the project is only partially financed by SBI.
Buying an apartment entails charges like stamp duty, registration fees, down-payment, GST and interest availed on home loans. The SBI RBBG scheme comes into play only if the project gets stuck. SBI only provides the principal amounts you have paid and not the other charges. You also don’t get home loan interest refunded. You also have a 6-month grace period till the guarantee clause kicks into action. You would have to continue paying home loan interest till this time. (This is for the grace period till the completion date).
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Before you sign the final agreement when buying the flat, understand the Project Delay Clause. Take a look at the compensation the builder has agreed to pay. The penalty on delay would be less than home loan interest payable. You would have to pay home loan interest and the penalty the builder pays would not be enough to meet this expense. If you are paying pre-EMI on under-construction apartment and construction gets delayed, the bank could convert pre-EMI to EMIs, increasing the home loan burden.
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