To attract buyers, builders have to come up with offers and discounts that make it possible for the average Indian to be tempted enough to shell out money in lakhs. This has led to the development of schemes like the 80:20 and the 75:25, with the former being more popular. Basically, this means that the purchaser has to pay for the housing on booking, either 20% or 25% of the total transaction value. The rest can be paid either on completion of the project or in phases, as the project develops.
On the buyer's side, the home is usually paid for by the use of a loan. The common man in India, being unable to purchase a house on his own power immediately, often has to resort to getting housing loans. With the Indian economy still on wobbly feet, the Reserve Bank of India is doing its best to push in some measures that will help India to get back on the route to growth again. The aim is to direct the flow of money where it can best be utilised for India's development and progress. One such measure is that of changed norms when it comes to housing loans. The money given to home buyers are generally tripartite agreements - agreements between the bank, the builder and the home buyer. Amounts are granted, and handed to the builders as a lump sum according to the chosen scheme. Until the project is complete, the builders end up paying the interest on the loan on the buyer's behalf. With the new norms the Reserve Bank of India has brought in for a house loan, though - the amounts will only be given partially as the building project progresses.
This bodes well for the nation in that money which has been allocated for housing loans doesn't get redirected towards matters other than its intended purpose. Banks end up having a decreased risk factor, risks which generally include the builder defaulting on the interest payment, the project being delayed due to various causes and disputes between the buyer and the builder. Keep in mind that the amount is taken out in your name - should there be a default in repayment, it's your credit rating which suffers. On the other hand, it could make your life more difficult in other ways. For one thing, the builders turn out to have shortage of money, which means that the project construction becomes difficult and all the more costly.
The notification given to banks is simply a deterrent, so that large chunks of money aren't handed out during unstable times for incomplete projects or projects under construction.