Home Loans : Bank’s list of approved projects is helpful but you can’t trust it completely

Source :Live Mint : Devesh Chandra Srivastava:Thu, Nov 17 2011. 9:27 PM IST


All you need to do is visit your bank’s branch and ask for the list of approved projects


Recently, the largest private sector bank in India, ICICI Bank Ltd, came up with a special offer for prospective homebuyers seeking a loan from the bank.


 However, the bank put a condition that only those customers who chose a property from the bank’s database of approved projects would get the special offer.


 Like ICICI Bank, most banks maintain a list of projects they approve of.


What is the list’s significance?




Properties figuring in banks’ lists are considered trustworthy since banks do their due diligence before including one. Usually, banks approve projects that are saleable in terms of their demand in the market. Banks also look at the developer’s capacity to complete the project.
It is usually easier to get a loan for a property in one of these projects. In fact, prospective buyers can check whether a property they like is in a bank’s approved list.


How can you get the list?


All you need to do is visit your bank’s branch and ask for the list of approved projects. The bank executive will ask for your preferred location and budget. Accordingly, he will shortlist four-five names for you.


Should you trust the list?


If a particular project is in a bank’s list, it indicates the project is relatively safer to invest. But you cannot trust the list completely as banks cannot take the guarantee in case of a title dispute or delay in possession. For example, in the recent land acquisition controversy in Noida Extension, most banks were financing homebuyers without any prior knowledge of the problems over land title and clearances. Later, when the case went to the court, banks stopped lending to homebuyers. Till date, homebuyers in Noida Extension are waiting to get a loan.


What should you do?


As the bank’s approval on a project is not the final word on the authenticity of the title and clearances, you should independently verify the details of the project. While the project is under construction, ask property dealers and consultants operating in that area for more information on the project. Other details can be sought from the local development authority by filing an application under the Right to Information Act to know if the developer has a licence number to build a particular project, whether he has the title of the land and if the local authority has approved the plans of the project.