The plain-English glossary.

AIF (Alternative Investment Fund)

A SEBI-registered pooled investment vehicle that raises capital from sophisticated investors and deploys it into unlisted or alternative assets. Category II AIFs are commonly used in Indian real estate — they invest in unlisted equity or debt of projects, acting as a flexible capital layer between senior bank debt and promoter equity.

Area Sharing JDA

A Joint Development Agreement structure where the land-owner receives an agreed percentage of the completed saleable area (e.g. 30% of flats or plots) instead of cash. The share is defined in super area or saleable area terms and is handed over after the project receives development authority approval. Common in residential plotted developments.

CA Advisory (Chartered Accountant Advisory)

Transactional advisory provided by CA-trained professionals covering deal-level due diligence, tax structuring, RERA compliance, and lender documentation. Distinct from statutory audit — CA advisory applies the same rigour to investment and lending decisions rather than financial statement certification.

CMA (Credit Monitoring Arrangement)

A standardised financial report format required by Indian banks and NBFCs for project finance appraisal. It includes 3 years of historical financials, projected P&L, balance sheets and cash flows, and DSCR calculations. A CA-prepared CMA is typically mandatory for any loan sanction above ₹5 Cr.

Construction Finance

Short-to-medium tenure project debt provided by banks, NBFCs or AIFs specifically to fund construction costs of a real estate development. Disbursed in tranches tied to construction milestones (plinth, slab, finishing). Repaid through project sales receivables routed through an escrow.

DSCR (Debt Service Coverage Ratio)

A credit metric calculated as Net Operating Income ÷ Total Debt Service (principal + interest). It measures how comfortably a project's cash flows can cover its loan obligations. Indian lenders typically require a minimum DSCR of 1.2x–1.5x across the loan life. Below 1.0x means the project cannot service its debt from operations alone.

EC (Encumbrance Certificate)

A government-issued document that records all registered transactions — mortgages, charges, sales, gifts — on a specific land parcel over a given period. A clean EC is mandatory for any property purchase or mortgage. Available at the sub-registrar office or via state government portals. Always verify EC independently — do not rely solely on the seller's copy.

Information Memorandum (IM)

The primary document a real estate developer or project presents to lenders and investors when raising debt or equity. A well-structured IM includes: executive summary, promoter profile, project overview, sources and uses, financial projections, DSCR analysis, security structure, market overview, and risk mitigants. A CA-signed IM carries more credibility with institutional lenders.

IRR (Internal Rate of Return)

The annualised rate of return at which the Net Present Value of all cash flows from an investment equals zero. In Indian real estate, IRR is the standard metric used to model and compare investment returns across projects. Typical target IRRs vary: plotted development 18–25%, residential apartments 14–20%, commercial 10–16%. Always stress-test the IRR against slower absorption scenarios.

JDA (Joint Development Agreement)

A contract between a land-owner and a developer that transfers development rights without a cash sale. The land-owner contributes the land; the developer contributes capital, approvals and construction capability. Returns are shared as either area (a % of completed units) or revenue (a % of project sales). A JDA must be registered with the sub-registrar to be enforceable and triggers tax obligations at signing.

JV (Joint Venture)

An equity partnership between two or more parties for a specific real estate project. Unlike a JDA (which is a development rights arrangement), a JV typically involves a Special Purpose Vehicle (SPV) company or LLP where both parties hold proportionate equity and share profits, losses and control rights. Used more commonly for larger or institutional transactions.

Loan Syndication

The process of arranging a large loan from multiple lenders simultaneously rather than from a single bank or NBFC. A lead arranger prepares the Information Memorandum, approaches 6–10 lenders concurrently, negotiates competing term-sheets, and executes a unified facility agreement. Syndication improves pricing tension, reduces concentration risk, and allows mandates above any single lender's exposure limit.

LRD (Lease Rental Discounting)

A structured loan against future rental income from a leased commercial property. The lender discounts the expected rentals (over a defined period) and disburses a lump sum to the borrower, who repays from ongoing rentals deposited into an escrow. LRD is popular for funded commercial real estate assets with long-term lease agreements.

LTC (Loan to Cost)

The ratio of loan amount to total project cost (land + construction + all other costs). A key leverage metric for construction finance. Typical LTC for Indian real estate: 60–70% for bank-funded projects, up to 75–80% for NBFC-funded. The balance (30–40%) must come from promoter equity or pre-sales.

LTV (Loan to Value)

The ratio of loan amount to the current market value of the asset pledged as security. Used primarily for mortgage-backed lending. Regulatory caps apply: RBI guidelines generally permit up to 80% LTV for home loans below ₹30 lakh, 75% for ₹30–75 lakh, and 70% above. For commercial real estate, lenders typically work to 50–60% LTV.

Mezzanine Finance

Structured capital that sits between senior debt and promoter equity in the capital stack. Mezzanine is typically provided by AIFs or private credit funds at higher interest rates (18–24% p.a.) than senior debt, with repayment linked to sales milestones or project cash flows. Used to bridge the gap between the LTV a bank will fund and the total capital a project requires.

NA Conversion (Non-Agricultural Conversion)

The process of converting agricultural land to non-agricultural (NA) use to permit construction. Required by state revenue laws before any development can begin. The conversion order is issued by the Collector or designated revenue authority. Without NA conversion, a bank or NBFC will not lend against the land, and no building plan can be sanctioned.

NBFC (Non-Banking Financial Company)

A financial institution registered with the RBI that provides loans, advances, and other financial services but does not hold a banking licence. NBFCs are the primary source of construction finance and working capital for Indian real estate developers — they move faster than banks, accept earlier-stage collateral, and price higher (typically 13–18% p.a. vs 9–12% for banks).

RERA (Real Estate Regulatory Authority)

The regulatory body established under the Real Estate (Regulation and Development) Act, 2016 to protect home-buyers and promote transparency in Indian real estate. Developers must register projects with RERA before launching sales; agents must also register. RERA mandates: 70% of collections into a project escrow, quarterly progress updates, and defined penalties for delays. Verify RERA registration at your state's RERA portal before any transaction.

Revenue Sharing JDA

A Joint Development Agreement structure where the land-owner receives an agreed percentage of the project's gross sales revenue rather than a share of area. Revenue flows through a jointly-monitored escrow account with a waterfall — typically: land-owner share → project costs → developer profit. Preferred by land-owners who want cash flow rather than physical units.

SPV (Special Purpose Vehicle)

A separate legal entity — typically a Private Limited Company or LLP — incorporated solely for a specific real estate project. SPVs ring-fence the project's assets and liabilities from the promoter's other businesses, making it easier for lenders to take security and for investors to participate. Most institutional lending for real estate is done at the SPV level.

Term Sheet

A non-binding (usually) preliminary document issued by a lender or investor outlining the key commercial terms of a proposed financing: loan amount, interest rate, tenure, security, covenants, drawdown conditions, fees and repayment structure. A term sheet is not a sanction — the full credit approval and legal documentation follow. Always have your CA or lawyer review a term sheet before accepting.

Title Search (Chain of Title)

A review of the registered ownership history of a land parcel to confirm clear, marketable title. A thorough title search traces the chain of ownership back 30 years (minimum 13 years), verifies every transfer is backed by a registered document, and confirms no gaps, disputes or encumbrances. Title defects — missing links in the chain, unregistered transfers, court orders — can make a property unfinanceable and unsaleable.