Error setting up the database with the custom build

[AlexCppns]

I am getting the following error when I try to run the custom rails configuration script. When it reads the database.yml:

YAML syntax error occurred while parsing /home/vagrant/demo/rails-devise/config/database.yml. Please note that YAML must be consistently indented using spaces. Tabs are not allowed. Error: (<unknown>): found undefined tag handle while parsing a node at line 22 column 13

[mutantkeyboard]

It would be obvious to read the error.
You can not use TAB key inside the YAML file. Use 4 spaces instead.
I prefer Brackets for this, and you can always find a good tutorials on sites such as StackOverflow -> http://stackoverflow.com/questions/22540956/adobe-brackets-write-spaces-instead-of-tabs

[BandanaPandey]

According to me, you have tabs instead of spaces in your database.yml.
This error seems pretty straightforward "Please note that YAML must be consistently indented using spaces. Tabs are not allowed." database.yml file probably contains some tabs.
So make sure that you are using spaces, not tabs also you can validate your YML with a linter like this:
yamllint.com
Hope this works for you.