Bank’s investigation helps customers for due diligence of projects
Buying a home is
undoubtedly a daunting task with many paraphernalia associated with it. At the
time of buying apartments from the builders or the developers the buyers often
have to do a due diligence and investigation for the background checks of the
developer. The buyers need to know the financial standing of the company or the
builder in question. One also needs to ensure that all the approvals are
already being obtained. These are of course the essentials that a buyer needs
to ensure before deciding to buy any project.
Approved Project Financial Number
Approved Project
Financial is a specific code that’s being given to the builders by the banks and
the finance companies whoever deals with realty funding and home loans. The APF
number is normally issued to the particular housing projects of builders
individually.
The APF number so issued
is a testimony that the financial institution is satisfied with the builder and
the specific project, its proposal, paperwork loans, documentations, legalities
and other factors. These APF codes help the builders to get loans also at short
notice. This number or the code denotes that the particular project has been
scrutinized and the approvals necessary has also been obtained.
According to the
financial experts the banks generally scrutinizes the builder’s background and
the project also along with the necessary documents and the licenses which is a
part of the KYC of the builder. The title documents and the required approvals
like the pollution, forest, environment, fire, height and the electricity board
is also checked.
The officials said
that whosoever applies for such code and approvals from the banks should have a
minimum of five years of experience in the realty field and construction of
projects. The builder should also be ISO certified and also be a member of any
of the chamber of the housing industry like Builder’s Association of India or
the CREDAI or any other. The minimum number of the completed and the running
projects of the company should be three.
APF a security for customers
It is a proven
fact that due diligence about the builder and the project details is necessary
for the customers or the prospective buyers. Moreover the background check or
the past history of the builder is also required to be verified by the customers
much with the assumption that history repeats itself.
This is exactly
what PFA does for the prospective buyers. It’s a fact that the banks or the
financial companies feel much confident if the project is financially viable. An
APF code designated by the bank signifies that the project is well yielding and
has also been well scrutinized. This minimizes the banks for the risk of
repayment by the builders.
Many Indian banks like the State Bank of India provide a Unique
Identification Number for such projects which are approved. This number is
often called Approved Project Financial Number or APF which can also be cross
checked from the website of the bank.
The bank officials
and the expert realtors state that this is a good way for the customers to check
the viability of the projects because the bank does the due diligence of the
projects already. One of the consultant remarked that nowadays the practice is
that every project is first given the due approvals and then the project is
taken ahead for completion of construction. But even before the project is
launched the builder approaches both the public and the private sector banks
for availability of funds.
It is then that the
banks ensure that the title is clear of the land and is free of litigation. This
investigation goes on and only when the banks are convinced that all are okay the
relevant authorities issues a NOC certificate. The truth is the financial
institutions both look into the financial and the legalities of a project before
they lend capital to the builders.
The trend watchers
and realty experts opine that this is an extra mile that is already walked by
the banks and financial institutions. The buyers should insist for the AFP
number from the banks which would mean that the due diligence is already done
by the banks and the finance companies.
0 Comment "Points to verify before making a property investment"
Post a Comment