East Bengaluru buyer answers
Delayed project, EMIs running: who bears the interest?
Direct answer: Your bank loan and your builder agreement are two separate contracts. Delay interest under RERA section 18 is what the promoter owes you if possession misses the agreement date. Pre-EMI or EMI you already owe the bank still follows the loan documents unless the bank agrees otherwise in writing.
Disclosure: acre&key’s advice is free to buyers; we are an authorised sales partner for some projects and may be paid by the developer.
Verify with your lawyer: This page is general guidance from the RERA Act and related public sources, not legal advice. Have your own property lawyer and banker review your agreement for sale and loan papers before you stop paying, claim interest or file a complaint.
Verify with your CA: Interest paid to a bank, interest received from a promoter, and any settlement amounts can have tax effects. Confirm treatment with a chartered accountant for your facts.
Construction slips, and the bank still bills interest. Can RERA make the builder carry your EMI? Not directly. The Act gives you a claim against the promoter. It does not rewrite your loan.
What does section 18 actually give you?
If the promoter fails to complete or cannot give possession by the date in the agreement for sale (or after registration is suspended or revoked), section 18(1) sets two paths (s.18):
- Withdraw: demand return of the amount paid for that apartment, with interest at the prescribed rate, plus compensation as provided under the Act.
- Stay: do not withdraw; the promoter must pay interest for every month of delay until possession, at the prescribed rate.
Section 19(4) mirrors the refund-with-interest right when possession fails as agreed (s.19(4)).
Those amounts are promoter → allottee obligations. They are not automatic credits to your home-loan account.
What is the prescribed interest rate?
Karnataka RERA's FAQ states that the rate payable by the promoter to the allottee, or by the allottee to the promoter, "shall be the State Bank of India highest marginal cost of lending rate plus two percent" (Karnataka RERA FAQ, Q8). The same rate works both ways, so it also applies if you pay the promoter late. Confirm the live SBI MCLR figure and the governing rule with your lawyer. This page does not publish a percentage that will go stale.
Why does the bank still collect pre-EMI or EMI?
Because you signed a loan agreement. Once the bank has released tranches against the project, the sanction letter and loan agreement decide what interest you pay on the disbursed amount. Nothing in the RERA Act pauses that because the building is late. Marketing lines such as "no EMI till possession" only help if they are written into a structure the bank accepted, and you should check what those documents say happens if the builder stops paying its share. Read the sanction letter and loan agreement, not the brochure.
Our separate note on how a home loan for an under-construction flat works covers tranches and pre-EMI without quoting rates.
Does section 18 interest equal my bank interest?
Not automatically. Section 18 uses the prescribed RERA rate. Your loan uses the bank's contractual rate. They can differ. A monthly delay-interest claim against the promoter is not the same line item as the debit on your loan statement. If you later recover money from the promoter, using it to prepay the loan is your choice. The RERA Act has no provision that sets it off against your loan for you.
What if I stop paying the bank because the builder delayed?
Stopping loan payments because the flat is late can put you in default under the loan agreement, and that is separate from any RERA case against the promoter. Section 19(6) also makes you responsible for payments due under the agreement for sale on the agreed schedule; section 19(7) adds prescribed interest if you pay the promoter late (s.19(6)–(7)). Section 19(8) says those obligations and the interest on them "may be reduced when mutually agreed to between the promoter and such allottee", so any payment holiday the builder offers you should be in writing. Talk to the bank and your lawyer before you skip either side's dues.
Builder delay vs RERA registration extension
A project's RERA registration can be extended under section 6 for force majeure or, without promoter default, for reasons recorded in writing, subject to the one-year aggregate cap for that second route (s.6). An Authority extension of registration is not, by itself, a free rewrite of the possession date in your agreement for sale. Section 18(1)(a) measures delay against the agreement for sale and the date specified in it. Check both the portal and your signed date, and ask your lawyer how any extension or amendment affects your claim. More on this in what a RERA extension means for buyers.
Payment-plan design still matters
If you are still choosing a plan, construction-linked vs time-linked payment plans change how fast money leaves you while the building lags. A stage-linked plan can slow cash-out when work stalls; a pure calendar plan may not. Your loan's tranche rules need to match the plan you sign.
Practical sequence when EMIs meet delay
- Diary the agreement possession date and every lender debit.
- Check the project on rera.karnataka.gov.in for quarterly updates and any extension order (how to check a Karnataka RERA project).
- Write to the promoter seeking either withdrawal under section 18 or monthly delay interest if you will stay.
- Inform the bank in writing; ask what options exist for restructuring without assuming a RERA order will pause interest.
- Keep rent, pre-EMI and living costs in one cash plan for longer than the promised date.
- If talks fail, consider filing a complaint with Karnataka RERA.
What this page will not claim
It will not say the builder "must pay your EMI", quote a standard settlement percentage, or promise that section 18 interest will match bank interest rupee for rupee. Outcomes follow your documents, the prescribed rate and any Authority order.
Frequently asked questions
Can RERA force the bank to stop charging interest?
No. RERA regulates the promoter–allottee relationship. Your lender is governed by the loan contract and banking regulation. Relief against the bank, if any, is a separate discussion with the bank or appropriate forum.
If I withdraw under section 18, what happens to the loan?
The promoter's refund obligation and the bank's repayment right both need to be closed out. Your loan agreement decides how the outstanding must be cleared, and the bank may want the refund routed to it first. Agree payee instructions with the bank before you settle.
Does delay interest under section 18 start from the agreement date?
It runs for every month of delay until possession when you stay in the project, under the proviso to section 18(1). Exact start and calculation issues are for your lawyer and the order or settlement you obtain.
Is a verbal "builder will pay your EMI" promise enough?
No. Get any subvention or EMI-support arrangement in documents the bank recognises. Sales chat is not a loan amendment.
Should I keep paying the builder after the possession date has passed?
That depends on whether you are withdrawing or staying, and on what the agreement and any interim order require. Do not decide from a WhatsApp rumour; take advice on your file.
References
- Real Estate (Regulation and Development) Act, 2016, ss. 6, 18, 19(4), 19(6)–(7), 31. https://rera.karnataka.gov.in/resources/staticpage/Real_Estate_Act.pdf, accessed 17 Oct 2026.
- Karnataka RERA FAQs, Q8 (rate of interest: SBI highest MCLR plus two percent). https://rera.karnataka.gov.in/resources/staticpage/KARNATKA_FAQs.pdf, accessed 17 Oct 2026.
- Karnataka RERA portal. https://rera.karnataka.gov.in, accessed 17 Oct 2026.