Your Builder's Project Loan: RBI's 2025 Rules on Land, OC Dates and Delays, Explained
RBI's Project Finance Directions, 2025, in force from October 1, 2025, set rules for lenders financing projects including residential housing: financial closure and an original DCCO tied to the expected occupancy certificate date before disbursement, 75 percent land availability, a stage linked disbursement schedule, and up to two years of DCCO deferment under a resolution plan. This guide explains what that means for Bengaluru buyers.
Most Bengaluru flat buyers never see the loan that funds the tower they are paying for. Yet the builder's project finance shapes how construction is paid for, what happens if completion slips and how lenders react to stress. Since October 1, 2025, those loans have been governed by the Reserve Bank of India's Project Finance Directions, 2025, which apply to infrastructure and non-infrastructure projects, including commercial real estate and commercial real estate residential housing, or CRE-RH.
The directions are written for lenders, not buyers. But several of their rules touch the questions buyers care about most: when the project is expected to get its occupancy certificate, whether enough land is in hand, and how long a delay a lender can absorb. This guide explains those rules in plain terms. It is buyer guidance, not legal advice and not a view on any project or lender.
The short answer. Under RBI's Project Finance Directions, 2025, a lender must ensure financial closure and a documented original DCCO before disbursing, and for housing projects the original DCCO is the expected occupancy certificate date. At least 75 percent of the land must be available before disbursement for non-infrastructure projects, and the loan agreement must carry a disbursement schedule linked to the stage of completion. Under a qualifying resolution plan, a housing project's DCCO can be deferred by up to two years while the loan stays standard. The trade-off: these rules make project lending more disciplined, but they protect the lender's books, not your booking, so your own checks remain essential.
What do the 2025 directions cover?
Project loans by most lenders. The directions apply to the project finance exposures of all commercial banks including small finance banks but excluding payments banks, local area banks and regional rural banks, all NBFCs including housing finance companies, all primary urban co-operative banks and all India financial institutions. They came into force on October 1, 2025.
RBI said it issued them to provide a harmonised framework for financing infrastructure and non-infrastructure projects, including commercial real estate and CRE-RH, and to lay down revised treatment when a project's date of commencement of commercial operations, or DCCO, changes. The directions divide every project into a design phase, a construction phase that runs from financial closure until the day before actual DCCO, and an operational phase.
What does DCCO mean for a housing project?
The expected occupancy certificate date. The directions define the original DCCO, for CRE and CRE-RH projects, as the date on which the occupancy certificate, or its equivalent, is expected to be obtained from the competent authority. The actual DCCO, for these projects, is the date on which the occupancy certificate or its equivalent is issued.
That definition ties the lender's key milestone to the same document buyers wait for. Before disbursing any funds, a lender shall ensure that financial closure has been achieved and that the original DCCO is clearly spelt out and documented. For a given project, the original, extended or actual DCCO shall be the same across all lenders to the project.
What must be in place before the lender disburses?
Land, a schedule and realistic repayment. The directions say a lender shall ensure availability of sufficient land or right of way before disbursing funds, with a minimum of 75 percent for non-infrastructure projects including CRE and CRE-RH. The project specific disbursement schedule, set against the stage of completion of the project, shall be included in the loan agreement.
Repayment must also be grounded. The post DCCO repayment schedule shall be realistically designed to factor in initial cash flows, and the original or revised repayment tenor, including any moratorium, shall not exceed 85 percent of the project's economic life. Lenders must also keep project specific data in an electronic database and update any change within 15 days.
The table below summarises the rules most relevant to a buyer.
| Rule in the 2025 directions | What it says for CRE-RH projects | What a buyer can take from it |
|---|---|---|
| Original DCCO | Date the occupancy certificate is expected | Compare it with the possession date you are promised |
| Before disbursement | Financial closure achieved, original DCCO documented | A funded project should have a defined completion target |
| Land availability | At least 75 percent before disbursement | Ask whether all land for your phase is in the builder's hands |
| Disbursement schedule | Linked to stage of completion in the loan agreement | Project funding is meant to follow construction progress |
| DCCO deferment | Up to two years under a qualifying resolution plan | A lender can absorb a delay without the loan turning bad |
How much delay can a lender absorb?
Up to two years for housing projects, under conditions. The directions say a standard project finance account that meets the prudential conditions can stay classified as standard when a resolution plan extending the original or extended DCCO is implemented, if the plan meets set conditions. The permitted deferment from the original DCCO is up to three years for infrastructure projects and up to two years for non-infrastructure projects, including CRE and CRE-RH.
Lenders may also finance cost overruns linked to a permitted deferment, up to a maximum of 10 percent of the original project cost in addition to interest during construction, subject to conditions. For accounts that use a DCCO deferment, lenders must hold additional specific provisions of 0.5625 percent for non-infrastructure project loans for each quarter of deferment, over and above the standard provision, reversed when commercial operation begins. The standard provision for CRE-RH is 1.00 percent in the construction phase and 0.75 percent in the operational phase after repayment begins.
A footnote matters for buyers. For CRE and CRE-RH projects, the directions say all provisions of the Real Estate (Regulation and Development) Act, 2016 are to be complied with in this context.
Who lends, and do older projects follow the same rules?
Lenders must each hold a meaningful share, and older projects keep some earlier rules. For under construction projects where lenders' aggregate exposure is up to Rs 1,500 crore, the directions say no individual lender shall have an exposure of less than 10 percent of the aggregate. Above Rs 1,500 crore, the floor for each lender is 5 percent or Rs 150 crore, whichever is higher. These minimums stop applying after the actual DCCO, when lenders may buy and sell exposures more freely.
For existing projects specified in the directions, the new provisioning rates do not apply, and those loans continue to follow the earlier prudential guidelines for provisioning. If such a project sees a fresh credit event or a change in material loan terms after October 1, 2025, the new provisioning rules apply to it as if it had been sanctioned after that date.
For a buyer, the practical takeaway is that a project's lenders are now required to agree on a single DCCO and to keep their own skin in the game during construction. That does not guarantee completion, but it does mean that a material change in a project's timeline is something its lenders must formally record and review.
What happens if a project runs into stress?
Lenders act collectively. The directions say lenders shall monitor project performance and any build up of stress and are expected to start a resolution plan well in advance. A credit event with any lender during the construction phase triggers a collective resolution under RBI's prudential framework, and a lender shall carry out a prima facie review within 30 days of the credit event. Credit events include a default with any lender and any lender determining a need to extend the DCCO.
None of this changes a buyer's contract with the builder. It does mean that a delay in your project's occupancy certificate may also be a formal event in its lenders' books, with a defined review process. The directions say non-compliance by lenders attracts supervisory and enforcement action.
What should a Bengaluru buyer check?
Ask about the money behind the building, alongside the usual title and approval checks. Our earlier explainers on a builder's project loan and a mortgage on your flat and on commencement, completion and occupancy certificates cover the buyer side in more depth.
- Ask the builder whether the project or phase is funded by a project loan, and from which lender.
- Ask what completion date the builder has committed to in its own filings, and compare it with your agreement.
- Ask whether all land for your phase is owned or available, not just most of it.
- Check that your payment schedule is linked to construction stages you can verify.
- Keep a record of construction progress against each payment demand.
- If a delay is announced, ask in writing for the revised completion date and the reason.
- Rely on your sale agreement and applicable law for remedies, not on the lender's internal process.
Frequently asked questions
What is a project's DCCO for a residential housing project?
RBI's Project Finance Directions, 2025 say that for commercial real estate and commercial real estate residential housing projects, the original DCCO is the date on which the occupancy certificate, or its equivalent, is expected to be obtained from the competent authority. Actual DCCO is when the occupancy certificate or equivalent is issued.
How much land must a builder have before a lender disburses a project loan?
The directions say a lender shall ensure availability of sufficient land or right of way before disbursing funds, with a minimum of 75 percent for non-infrastructure projects, including commercial real estate and residential housing. For infrastructure projects under the PPP model the minimum is 50 percent, and for transmission lines it is as decided by the lender.
Can a lender extend a housing project's completion date without treating the loan as bad?
Under a resolution plan meeting the directions' conditions, a lender can defer the original or extended DCCO of a non-infrastructure project, including residential housing, by up to two years and keep the account standard, with additional provisions for each quarter of deferment. Infrastructure projects get up to three years.
Do these RBI directions give flat buyers any direct rights?
The directions govern how lenders finance and monitor projects, not buyers' contracts. They do note that for commercial real estate and residential housing projects, all provisions of the Real Estate (Regulation and Development) Act, 2016 are to be complied with where DCCO deferment is permitted. A buyer's own remedies come from the sale agreement and applicable law.
Last updated 2026-11-02. PropNewz Team.
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