New Delhi, Sept. 24 -- For thousands of Indian families, a builder's bankruptcy means losing the home they paid for, while still juggling EMIs and rent. Now, spurred by a 12 September Supreme Court ruling that declared the right to shelter a fundamental right under Article 21, the government and bankruptcy regulator Insolvency and Bankruptcy Board of India (IBBI) are weighing reforms to protect genuine homebuyers and restore credibility to the real estate sector.

Two people familiar with the matter, who spoke on the condition of anonymity, said discussions are at an early stage and aim to address the sector's credibility gap and protect those who invest their life savings in homes.

The Supreme Court, ruling in the case of Mansi Brar Fer...