State Bank of India (SBI) has announced the Residential Builder Finance with Buyer Guarantee (RBBG) scheme to safeguard home buyers financially. .

Discussing the importance and purpose of the scheme Rajnish Kumar, chairman of SBI said, “There is a huge concern amongst the home buyers whenever they want to invest in the projects under construction. We finance the projects anyway and so the bank is taking project risk. Whenever we are giving a home loan for buying any flat in any project, the level of due diligence which will be done in this case on the builder will be much higher,” he said.

He also specified that the plan was bank’s brainchild. "It is absolutely SBI’s idea."

He further said, if the home buyer does not meet SBI’s credit criteria and borrows from another lender, then SBI will not issue them the guarantee but will not put any restriction. "They can take loan from any bank of their choice but this guarantee we are giving only to people who will be taking home loan from us,” he added in an interview with CNBC-TV18.

Currently, the bank has signed an MoU with Sunteck Realty for three projects, he said, adding that due diligence for these projects will be done before the projects are approved.

The bank is receiving huge interest from builders after the new finance scheme was announced, he said. "Everybody wants this scheme to be introduced for their city also,” Kumar stated.

“As far as the borrower is concerned, there will not be any change in the home loan rates. As far as guarantee fee is concerned, that we will charge the builder,” Kumar further clarified.

"This is a win-win situation for all three - the home buyer, the builder and the bank," he said.