1. Staged or up front?
Is the loan released in stages linked to construction, or paid out up front? The court’s amicus pointed out that RBI and NHB guidelines expect the first.
Field note · buyer protection
“No EMI till possession”: who pays if the builder stops
Subvention offers read well in a festive brochure. Underneath, the loan is in your name, the money may already be with the builder, and the promise to pay the interest is the builder’s alone.
The short version. In April 2025 the Supreme Court ordered a CBI inquiry into subvention schemes in the NCR, where banks had paid 60 to 70% of home loans to builders before the buildings were finished. By July 2025 it had allowed the CBI to register 22 cases against developers and banks. When builders stopped paying the interest, the EMI demands went to the buyers.
How it works
Three parties, one agreement, and one person carrying the risk
The mechanics
You take the home loan. Your name is on it, and so is the repayment obligation.
The bank pays the builder, often a large share up front rather than in stages linked to construction.
The builder promises to pay the interest until you get possession. That promise sits in the tripartite agreement, and it is only as good as the builder’s cash flow.
If the builder stops paying, the bank does not wait for the project to finish. It asks the borrower for the EMI, on a flat that may still be a slab. That is the position the NCR buyers found themselves in before the cases reached the Supreme Court.
The NCR cases are the documented ones. This note does not suggest that any Maharashtra project is under investigation. The structure is the same wherever the offer is made, which is why the questions below apply in Pune and Mumbai too.
Before signing
Four answers to get in writing
2. What if the builder misses a payment?
Ask what the tripartite agreement says the bank does next if the builder misses an interest payment, and how quickly it turns to you.
3. Which possession date?
Is the “possession” in the offer the same as the completion date on the project’s MahaRERA page? If the two differ, the scheme may run out before the flat is ready. See what a MahaRERA number proves.
4. What is the price without the scheme?
The interest the builder pays has to come from somewhere, usually the price. Ask for the price of the same flat on a standard construction-linked plan, and compare.
A subvention scheme moves construction risk onto the one person who can’t control construction. Price it that way.
This note summarises reported court orders and explains a common financing structure. It is not legal or financial advice. Have the tripartite agreement read by your own advocate before signing.
Questions
Common questions about subvention schemes
What is a subvention scheme in real estate?
An arrangement where the buyer takes a home loan, the bank pays the builder, and the builder promises to pay the interest until possession. It is usually advertised as “no EMI till possession”. The loan, and the obligation to repay it, stays in the buyer’s name.
Who pays the EMI if the builder stops paying under a subvention scheme?
The borrower. The bank looks to the person named on the loan, whether or not the flat is finished. That is what happened to buyers in the NCR cases the Supreme Court referred to the CBI in 2025.
Is “no EMI till possession” worth taking?
Only once you know how the loan is disbursed, what happens if the builder misses a payment, whether the possession date matches the MahaRERA completion date, and what the flat costs without the scheme. Without those four answers, you can’t price the risk you are taking on.
Been offered a subvention deal?
Send me the offer letter. I’ll set it against the standard payment plan and the MahaRERA dates, and tell you what you are really paying for.