A recent circular on housing finance issued by the RBI has reemphasized on the need of builders to publicly disclose names of the banks they have mortgaged their land and apartments to. However, despite this directive, none of the developers have done this so far.

The RBI circular asked banks granting loans for housing projects to ensure that builders or construction companies disclose in pamphlets, brochures and advertisements in newspapers whom they have mortgaged their property to.

“We must honour this stipulation. There should be no harm or difficultly in doing so. There have been complaints that the flat buyer was not aware about the mortgage. This rule will bring more transperancy,” said Sunil Mantri, President, Maharashtra Chamber of Housing Industry.

Builders generally mortgage their land to get construction loans, a fact that most consumers are unaware of when they book flats in such projects. However, most builders have avoided publicising these details.

According to industry sources, builders are handing out allotment letters to flat purchasers even when the flats are mortgaged to banks and financial institutions by the builder. The buyer has no clue about this because the developer never divulges this information.

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