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Home loans to be linked to progress of project
NEW DELHI, DEC 28 (AGENCIES):
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Published on 28 Dec. 2009 10:53 PM IST
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Home loan providers are now insisting on construction-linked disbursal of funds to new projects, as they look to make developers more accountable after getting stuck in several stalled projects. A number of developers have either stopped construction midway or slowed down due to shortage of funds and poor sales in 2008 and the first half of 2009. Lending institutions expect the move to help them monitor the progress of construction and make developers accountable, said a senior executive with a public sector bank. “Buyers in such projects are in a difficult situation. They have to pay monthly installments towards the loan without getting the possession of house. They also end up shelling out monthly rents during the period,” he said, requesting anonymity. HDFC, one of the largest lenders in the home loan segment, has discontinued the practice of up front disbursals and linked the flow of funds to progress of construction, said another industry executive who asked not to be named. A spokesman for HDFC declined to comment.

 
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