in the wake of the ongoing nonperforming assets npa crisis in the banking industry the state bank of india sbi has decided against funding the interest during the construction period on the loans taken by the corporate sector including real estate the decision is aimed at derisking the banks loan book sbi chairman rajnish kumar told economic timesthe real estate sector is already reeling under pressure due to shortage of funds unfinished projects and unsold inventory amidst lack of buyer interest now what will this move by the countrys largest lender mean for the beleaguered real estate companies will it influence homebuyers in any way according to anuj puri chairman anarock property consultants sbi and other banks decision to tighten project finance norms by not funding the interest during construction will definitely have an impact on all real estateassociated sectorshow it will impact buildersin a real estate project builders generally assume that 30 percent will come from the buyer 30 percent from their own sources and the remaining 40 percent by borrowing from financial institutions like banks now with builders depending so much on funding from banks there in for tough times as lending norms can become stricter sbis decision may make other banks follow suit and come up with stricter rules for financing of projects in the coming months more banks will be reluctant to lend to the real estate sector due to lack of transparency and other issues banks are also often reluctant to lend to the developer given the challenges in the sector says amit ruparel managing director ruparel realty a mumbai based real estate developer this in turn can spell bad news for homebuyers as getting loans especially for underconstruction properties might become more difficult however a home buyer in recent times has the real estate regulation and development act or rera to fall back uponrole of rera rera ensures that the builder comes up with a deadline to deliver the project and most importantly does not siphon funds to other projects according to rera guidelines if a promoter fails to complete or is unable to give possession of the property within the agreed time period he has to return the total amount with interest at such rate as mentioned in the sale agreementfurther 70 percent of the amount realised for the real estate project from buyers from time to time shall be deposited in a separate account to be maintained by a bank to cover the cost of construction and the land cost and will be used only for this purpose with rera inplace developers are bound by the committed construction timelines and if these are not adhered to there are harsh penalties as a result any tweaks on project finance and related norms should not worry buyers as it is in the developers prerogative to arrange funds and complete the project as per the committed timelines however it may so happen that developers add an additional buffer to the committed completion timelines so that