MUMBAI: The Reserve Bank of India's directive to banks on home loan disbursements has come as a blow for realty companies, which have been betting on luring schemes to pull up sagging sales.
The central bank has barred banks from providing upfront housing loans for under-construction projects through innovative schemes termed as "80:20" or "75:25" by the developers.
As per the schemes, an individual can purchase a property from a developer with financing from a bank. The buyer has to only make 20 per cent as upfront payment and the balance 80 per cent has to be paid once he gets possession.
The developer ties up with a financial institution and gets the 80 per cent from bank. The developer pays the EMI till the buyer gets the possession of the property.
"In view of the higher risks associated with such lump-sum disbursal of sanctioned housing loans and customer suitability issues, banks are advised that disbursal of housing loans sanctioned to individuals should be closely linked to the stages of construction of the housing project/houses and upfront disbursal should not be made in cases of incomplete/under-construction/green field housing projects," the RBI advisory to banks said.
According to analysts, the RBI directive will have negative impact on real estate sector as it will slow down sale of properties. For banks, it will curb in rising NPAs if the developer defaults.
"Apprehension of bad loans coming in from the developer segment actually goes off a little bit," said Mayuresh Joshi, VP-Institution, Angel Broking
Meanwhile CLSA has cut earnings estimates of real estate companies by 5-19 per cent for FY14-15. It prefers Prestige Estates, Sobha Developers and Oberoi Realty in the sector.
At 11:00 a.m., the S&P BSE Realty Index was down 1.29 per cent even as the S&P BSE Sensex gained 1.51 per cent.
DLF (2.67 per cent), Godrej Properties (1.07 per cent), Indiabulls Real Estate (1.52 per cent) and Sobha Developers (3.25 per cent) were among the top sectoral losers.
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