........By asking banks not to fund such projects and cautioning buyers about the credit rating if the builder fails, RBI is clearly giving a signal that builders need to bring in their own money to buy land. Once the project takes off, they can sell it to buyers to raise money for construction purposes. Bankers said that in this way, RBI is trying to ensure that there is no deviation from Subbarao’s predecessor Y V Reddy’s diktat that banks cannot fund land purchases. Also, it is likely to force builders to complete existing projects and sell them before moving on to the next one. There are already talks that this move could lead to fall in real estate prices. Of course, the performance of Reserve Bank of India governors are normally weighed by ‘inflation containment’ and ‘growth support’ through their interest rate or liquidity regime............
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