StCBs/CCBs - Housing Sector: Innovative Housing Loan Products - Upfront disbursal of housing loans

has observed that some banks have introduced certain innovative Housing Loan Schemes in association with developers/builders, e.g. upfront disbursal of sanctioned individual housing loans to the builders without linking the disbursal's to various stages of construction of housing project, interest/EMI on the housing loan availed of by the individual borrower being serviced by the builders during the construction period/specified period, etc. Such housing loan products are likely to expose
the banks as well as their home loan borrowers to additional risks. StCBs and CCBs 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