Do you know these entities are not eligible for bank finance for construction of buildings?

Updated as per RBI master circular dated April 2, 2024

As per RBI guidelines, the following entities/offices are not eligible for bank finance.

1. Government/Semi-Government offices including Municipal and Panchayat Offices. However, banks may grant loans for activities, which will be refinanced by institutions like NABARD.
2. Projects undertaken by public sector entities that are not corporate bodies (i.e. public sector undertakings that are not registered under the Companies Act or which are not Corporations established under the relevant statute)
3. In the cases of projects undertaken by public sector corporate bodies registered under the Companies Act, banks should satisfy themselves that the project is run on commercial lines and that bank finance is not instead of or to substitute budgetary resources envisaged for the project. The loan could, however, supplement budgetary resources if such supplementing was contemplated in the project design. Thus, in the case of a housing project, where the project is run on commercial lines, and the Government is interested in promoting the project either for the benefit of the weaker sections of society or otherwise, and a part of the project cost is met by the Government through subsidies made available and/or contributions to the capital of the institutions taking up the project, the bank finance should be restricted to an amount arrived at after reducing from the total project cost the amount of subsidy/capital contribution receivable from the Government and any other resources proposed to be made available by the Government.
4. Banks shall not grant loans to Government projects like State Police Housing Corporation, for the construction of residential quarters for allotment to employees, where the loans were envisaged to be repaid out of budgetary allocations, although in the past banks had sanctioned term loans to such projects. As these projects cannot be considered to be run on commercial lines, it would not be for banks to grant loans to such projects.
5. Banks are not permitted to extend fund-based or non-fund-based facilities to private builders for the acquisition of land even as part of a housing project.

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INNOVATIVE HOUSING LOAN PRODUCTS AND UPFRONT DISBURSAL OF LOAN	DO YOU KNOW THESE ENTITIES ARE NOT ELIGIBLE FOR BANK FINANCE FOR CONSTRUCTION OF BUILDINGS?