CBI to probe banker-builder ties over subvention schemes

The Supreme Court asked the CBI (Central Bureau of Investigation) to form a special investigation team (SIT) to examine the practice, starting with projects from bankrupt Supertech Ltd in the Delhi-National Capital Region (NCR). The order by a bench of Justices Surya Kant and N. Kotiswar Singh comes as some relief for homebuyers who had moved the court.

According to the court’s directions, CBI’s first preliminary enquiry (PE) will focus on projects developed by Supertech Ltd. Another will examine projects by other builders in Mumbai, Bengaluru, Kolkata, Mohali, and Allahabad. Additionally, five PEs will cover projects under the jurisdiction of regional development authorities in Noida, Greater Noida, Yamuna Expressway, Gurugram, and Ghaziabad.

Acknowledging the scale of the issue—particularly in Uttar Pradesh and Haryana—the court asked both state governments to nominate officers for deputation to the CBI. These officers will be part of the SIT, along with CBI officials and chartered accountants. The court also directed the appointment of nodal officers and instructed both states to ensure full cooperation. 

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The bench will monitor the matter every month to ensure timely progress, and emphasized the need to deliver urgent relief to affected homebuyers.

What is a subvention scheme?

In the so-called subvention schemes, apartment buyers would make a deposit with the builder, and the builder would promise to pay EMIs (equated monthly instalments) until the house would be handed over. 

Under such schemes, banks disbursed up to 70-80% of the loan upfront, often without verifying the project’s progress, violating RBI’s 2013 guidelines. Launched in the early-to-mid-2010s, these schemes were wildly popular across Noida, Greater Noida, Gurugram, and adjoining areas. 

By 2018-2019, construction ground to a halt in several projects and some were never launched. Even as many of the builders failed to meet their EMI commitments, banks began pursuing the homebuyers for EMI payments instead of holding the builders accountable.

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Several developers later entered insolvency under the Insolvency and Bankruptcy Code (IBC), beginning in 2020.

Buyers first approached the Delhi High Court, seeking directions for banks to recover dues from builders and refund unjust EMIs. Their plea was dismissed, with the court suggesting they approach RERA (Real Estate Regulatory Authority) or consumer forums. The buyers then moved the Supreme Court, citing public interest and alleging systemic collusion between builders and lenders.

Samir Jasuja, CEO and founder of real estate data consultant PropEquity, said subvention schemes were once a popular marketing tool, where buyers paid about 20% upfront and the rest after possession. 

“Typically, the builder bore the EMI interest, which was built into the price. But when developers failed to deliver, buyers were left to pay EMIs without getting the homes,” he said. He added that such schemes are rare today, replaced by staggered payment plans like 30:30:40 to better link disbursements with construction.

Aakash Goel, coordinator of United ARs (authorized representatives) for 26,500 homebuyers across 16 incomplete projects of Supertech Ltd in Noida, Greater Noida and Gurugram, said the projects have been stalled for 10-15 years. 

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“We have been paying rent and EMIs at the same time for years now,” said Goel, also a homebuyer in a Supertech project. “In many cases, we have already made 90% of the payment for our units.” 

Legacy problem

Industry observers say real estate scandals have rocked the NCR market over the past decade. Builders engaged in frenzied land deals and unchecked expansion, often diverting funds. Hundreds of projects were stalled or never delivered. 

While reputed developers have regained buyer trust post-covid and following the introduction of the RERA legislation (which was passed in 2016 and came into force in May 2017), legacy projects—like those by Supertech Ltd. and Jaypee—continue to haunt the region. 

Manoj Gaur, president of the Confederation of Real Estate Developers’ Associations of India (Credai) NCR, an industry body, said builders earlier offered various subvention schemes to attract customers, when home sales were slow pre-covid.

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“Today, customer payments are entirely construction-linked. Also, Rera allows a customer to halt EMI payment if a project construction has stopped. Subvention schemes in stuck, legacy projects was only one of their many problems. With Rera, developers are aware of the heavy cost of major delays, so they try to avoid them,” Gaur said.

Why the top court ordered a probe

On 5 November 2024, the Supreme Court had directed all stakeholders—builders, banks, and homebuyers—to file compliance affidavits detailing payments, construction status, possession updates, EMI recoveries, insolvency proceedings, advertised vs. delivered amenities, and any regulatory orders. However, of approximately 70 entities, only nine banks and five builders responded.

On 5 March 2025, the Court noted this widespread non-compliance as indicative of possible collusion. It then summoned the CBI standing counsel to assist in the formation of an SIT and consider initiating a criminal probe—culminating in Tuesday’s order.

Meanwhile, United ARs filed a petition at the National Company Law Appellate Tribunal (NCLAT) last September requesting for appointment of NBCC Ltd to complete all stalled projects, ouster of former management of Supertech including the promoter R.K. Arora, and initiation of a forensic audit into the affairs of Supertech.

On 21 February, the SC stayed an order by the NCLAT that allowed NBCC to take over Supertech’s projects, agreeing to examine alternate proposals for their completion. The matter is yet to be further heard in court.

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