Housing fin schemes like ‘80:20’ and ‘75:25’ return to market in new avatar
Several innovative housing finance schemes – including the ‘80:20’ and ‘75:25’ schemes – are making a return to the housing finance market in a new avatar, thanks to the dwindling demand for residential real estate.
The return of the housing financing schemes like ‘80:20’ and ‘75:25’ schemes, though with some notable changes, has come after a brief pause following the Reserve Bank of India (RBI)’s cautionary note to the banks.
The RBI’s September 2013 advisory to the banks was to refrain from being a part of the mentioned housing finance schemes was essentially rooted in the fact that the earlier 80:20 or 75:25 schemes involved a lot of potential risks for banks.
The schemes required the customers to pay 20 percent of the value of a residential property to the developer, with the remaining amount sourced and disbursed via a tripartite agreement between the customer, the developer and the bank. Under the terms of the agreement, the bank had to give the remaining 80 percent of the amount upfront to the developer.
After the RBI’s cautionary note to the banks, there are now two forms for the new 80:20 schemes. One form includes an agreement only between the developer and the customer, who has to pay 20 percent to book a residential property; and the other form involves the disbursement of 80 percent of the amount to the developer by the banks, with the schedule of payment now having been made construction-linked rather than upfront.
Source – The Financial Express
