RBI's New Project Finance Guidelines Impact Real Estate Lenders' Operations

The Reserve Bank of India's new real estate project financing guidelines, effective from October 1, require lenders to maintain a fixed debt-to-equity ratio throughout a project's lifecycle and prohibit top-up loans beyond the initially sanctioned amount. These rules aim to enhance financial discipline and prevent misuse of funds by developers. However, lenders face operational challenges, leading some to offer general corporate purpose loans while assessing borrowers' end use to comply with the regulations and support project funding.