New Delhi: A major investigation is underway into a widespread bank-builder nexus implicated in a significant loan fraud scheme across India. The Central Bureau of Investigation (CBI) has registered 22 cases following a Supreme Court directive following petitions from hundreds of aggrieved home buyers. The scandal revolves around subvention schemes, a common practice in the real estate sector where builders are responsible for paying EMIs until home buyers receive possession of their property.
Numerous home buyers, having made initial down payments of 10-20 per cent, reported that banks disbursed the remaining loan amounts directly to the builders without adequate oversight of construction progress. When builders defaulted on their EMI obligations, banks allegedly shifted the burden to the home buyers, breaching the terms of the tripartite agreement between the bank, builder, and buyer.
This action has left many buyers facing financial ruin, with outstanding EMIs adding to existing rent payments. Many individuals have experienced immense emotional distress, noting the years-long delays in project completion and the lack of basic amenities in their unfinished properties.
The investigation aims to determine whether banks fulfilled their due diligence responsibilities, including adherence to master circulars. Allegations of collusion between certain banks and Non-Banking Financial Companies (NBFCs) with builders are also being probed. The CBI raids conducted across various cities, including those in the National Capital Region (NCR), suggest the scale of the alleged malpractice.
The consequences extend beyond financial hardship. The emotional toll on home buyers, particularly those who have faced construction delays for years, is substantial. The erosion of trust in financial institutions and developers is significant. The case is not confined to a few areas; similar practices are suspected in other major Indian cities, potentially involving thousands of home buyers. This investigation has the potential to uncover one of India’s largest financial scams. The outcome will be crucial in determining accountability and safeguarding the rights of home buyers.