East Bengaluru buyer answers
My home loan is sanctioned. Why hasn't the money been disbursed?
Direct answer: A sanction is the bank's offer on stated terms; disbursement is the actual release of money, and RBI rules tie it to conditions. For under-construction flats, disbursal must follow construction stages, and money can wait for project clearances. Read every condition in your sanction letter and match it to the builder's demand.
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 and CA: This page explains RBI instructions to banks and the RERA Act in general terms. It is not loan, legal or tax advice. Your lender's sanction letter and loan agreement govern your case. Have your lawyer read them with your agreement for sale, and ask a CA about any tax angle.
Buyers in East Bengaluru often celebrate the sanction email and then get a demand letter from the builder a few weeks later, only to find the bank has not paid. The two documents answer different questions. The sanction says how much the bank is willing to lend and on what terms. Disbursement says whether those terms are met today, for this payment.
What is the difference between sanction and disbursement?
RBI's Fair Practices Code for lenders, in its Master Circular on Loans and Advances (2015), describes the two steps separately.
At sanction, "The lender should convey to the borrower the credit limit along with the terms and conditions thereof and keep the borrower's acceptance of these terms and conditions given with his full knowledge on record." The same code says terms "should be reduced in writing and duly certified by the authorised official", and that banks "should invariably furnish a copy of the loan agreement along with a copy each of all enclosures quoted in the loan agreement to all the borrowers at the time of sanction / disbursement of loans."
On disbursement, it says: "Lenders should ensure timely disbursement of loans sanctioned in conformity with the terms and conditions governing such sanction."
So the bank's duty is timely release in conformity with the terms. If a term is not yet met, the sanction stands but the money waits.
How much a bank can lend against the property's cost is covered in RBI's LTV and down payment rules.
Why can a sanctioned loan stall?
Most stalls trace back to one of five things written in RBI rules or in your own sanction letter.
1. The construction stage hasn't caught up with the demand
RBI's Master Circular on Housing Finance (RBI/2025-26/16, 1 April 2025), para 4(c), says: "Disbursal of housing loans sanctioned to individuals should be closely linked to the stages of construction of the housing project / houses and upfront disbursal should not be made in cases of incomplete / under-construction / green field housing projects."
If the builder raises a demand for a stage the bank's records do not yet show as reached, the bank may hold the tranche. The same para explains why RBI is strict here: lump-sum disbursal to builders "without any linkage to stages of constructions" leaves banks with "disproportionately higher exposures with concomitant risks of diversion of funds." Our guide on how tranches work for an under-construction flat covers the stage pattern in more detail, and construction-linked vs time-linked payment plans explains why a time-linked plan is more likely to run ahead of the bank.
Para 4(d) carves out projects sponsored by Government or statutory authorities, where banks may disburse as per the authority's payment stages, provided "such authorities have no past history of non-completion of projects." Private projects do not get that carve-out.
2. Project clearances are pending
Para 6 of the Housing Finance circular says banks should ensure borrowers "have obtained prior permission from government / local governments / other statutory authorities for the project, wherever required." It then adds that "while the proposals could be sanctioned in normal course, the disbursements should be made only after the borrower has obtained requisite clearances from the government authorities."
That sentence explains a lot of real cases. A sanction can be issued while an approval is still awaited, and disbursement can wait on it. Before you pay a builder demand, check the project's approvals on the Karnataka RERA portal (how to check a project) and ask the bank which document it is waiting for.
3. Your own contribution is not yet paid
Para 3 sets loan-to-value (LTV) caps. As the table reads, loans up to ₹30 lakh can go up to 90%, loans above ₹30 lakh and up to ₹75 lakh up to 80%, and loans above ₹75 lakh up to 75%. Para 3(b) adds that banks "should not include stamp duty, registration and other documentation charges in the cost of the housing property they finance", except where the unit costs up to ₹10 lakh.
So part of the price, and the registration costs, come from you. Check whether your sanction letter requires your share to be paid first. If it does, missing receipts on the bank's file can hold a release.
4. A condition in the sanction letter is still open
Every sanction letter carries its own list, and each lender's differs. Look for items such as a registered agreement, any tripartite agreement, a builder no-objection letter, title and technical reports, insurance and signed loan documents. Read the "terms and conditions" and "pre-disbursement conditions" sections line by line and tick off what you have submitted, with dates.
5. The terms changed after sanction
The Fair Practices Code says lenders "should give notice of any change in the terms and conditions including interest rates, service charges etc." and "should also ensure that changes in interest rates and charges are effected only prospectively." If the bank says it needs a revised sanction before releasing money, ask for the change in writing and compare it with the original letter.
If your booking is on a no-EMI-till-possession plan, read the risks of subvention schemes as well.
What happens if the builder's demand falls due before the bank pays?
This is where buyers get hurt. Under RERA section 19(6), every allottee who has signed an agreement for sale "shall be responsible to make necessary payments in the manner and within the time as specified in the said agreement for sale". Section 19(7) makes the allottee "liable to pay interest, at such rate as may be prescribed, for any delay in payment". Section 19(8) says those obligations "may be reduced when mutually agreed to between the promoter and such allottee."
The Karnataka RERA proforma agreement of sale goes further: if the allottee fails to pay the stated number of consecutive demands despite notice, interest runs at the prescribed rate, and continued default can lead to cancellation after notice, with the promoter required to intimate termination "at least thirty days prior to such termination."
A bank delay does not, by itself, pause your payment clock with the builder. Practical steps:
- Tell the builder in writing, with the bank's written reason, before the due date.
- Ask the builder to confirm whether the demand matches the stage the bank's engineer has certified.
- Ask both sides, in writing, whether any interest will be waived under section 19(8). Do not assume it.
- Keep a dated folder of demands, bank emails and receipts. Our page on delayed projects and EMI interest covers the reverse case, where the builder is late.
What should I check before I rely on a sanction?
- Amount and LTV. Is the sanctioned amount enough once stamp duty, registration and your own share are paid separately?
- Validity. Does the letter state how long the sanction is valid? If disbursement starts late, you may need a renewal.
- Pre-disbursement conditions. List each one and who has to supply it: you, the builder or the bank's panel.
- Stage mapping. Put the builder's payment plan next to the bank's disbursal schedule. Any demand that falls before the matching stage is a gap you must fund or negotiate.
- Interest terms. Note the rate type and the reset rules, so you can spot a later change.
- Agreement clauses. Have your lawyer read the payment and default clauses in the agreement for sale (what to check in the builder's sale agreement).
If the application was turned down instead, see what a lender must tell you when it rejects a home loan.
Where do I complain if the bank sits on a disbursement?
Start with the branch and ask for the reason in writing. RBI's Fair Practices Code asks each bank's board to "lay down the appropriate grievance redressal mechanism within the organization", one that ensures disputes over lending decisions "are heard and disposed of at least at the next higher level." Use that route first and keep the reply.
If the delay is the builder's (a stage not reached, approvals pending), the bank is following RBI's linkage rule, and your conversation is with the builder and, if needed, Karnataka RERA.
Frequently asked questions
Is a home loan sanction letter a guarantee that the bank will pay?
No. It records the amount and terms the bank has offered. RBI's Fair Practices Code asks lenders to disburse on time "in conformity with the terms and conditions governing such sanction", so open conditions can hold the money.
Can the bank release my whole loan to the builder in one go?
Not for an under-construction project. RBI's Housing Finance circular says upfront disbursal "should not be made in cases of incomplete / under-construction / green field housing projects", with a narrow exception for some Government or statutory authority projects.
Does the loan cover stamp duty and registration?
Generally no. RBI tells banks not to include stamp duty, registration and documentation charges in the property cost they finance, except where the unit costs up to ₹10 lakh. Budget for these yourself.
If the bank is late, do I still owe the builder interest?
Possibly. RERA section 19(6) and (7) put payment on the allottee as per the agreement, with interest for delay. Section 19(8) allows reduction only by mutual agreement. Get any waiver in writing.
Can the bank change my interest rate after sanction?
The Fair Practices Code requires notice of changes to terms, including interest rates, and says rate and charge changes should be effected only prospectively. Check your loan agreement's reset clause.
References
- Reserve Bank of India, Master Circular – Housing Finance, RBI/2025-26/16, 1 April 2025, paras 3, 4, 6. https://www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=12824, accessed 17 Oct 2026.
- Reserve Bank of India, Master Circular – Loans and Advances – Statutory and Other Restrictions, RBI/2015-16/95, 1 July 2015, para 2.5 (Fair Practices Code for Lenders). https://www.rbi.org.in/Scripts/BS_ViewMasCirculardetails.aspx?id=9902, accessed 17 Oct 2026.
- Real Estate (Regulation and Development) Act, 2016, s.19(6)-(8): https://rera.karnataka.gov.in/resources/staticpage/Real_Estate_Act.pdf
- Karnataka RERA, Proforma Agreement of Sale (default by allottee clause): https://rera.karnataka.gov.in/