Subvention Scheme – A true Story

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subvention
Builders are offering 0% interest subvention schemes for a specific period to lure the buyers. The case below will expose the mal-intention of the builders including the well reputed names.
My Friend Sanjay  bought an apartment from a reputed builder in 2011 in the so called “subvention scheme” that had zero EMI for 24 months. As per the agreement the possession was to be provided within 36 months from the date of agreement.
As part of the subvention scheme, a loan of 80% of the cost from a bank was approved in my friend’s name, with an understanding that pre-EMIs will start after 2 years.
Current Situation
Now comes the interesting situation.Two years have already passed, the construction is yet to start. It may take 3, 4, …. or God knows how many years to complete the project. Pre-EMIs will start and now he  have to pay full interest on the 80% of the cost of the apartment until he get the possession.
The penalty for the delay by the builder is insignificant….. Rs 5. per sqft and most likely will be  adjusted against “increased superarea”.
Conclusion
It is a clear cut nexus between the builders and the banks. Banks earn interest from both builder and  buyer on 80% of the cost of the flat for much longer periods instead of intended period of 1 year.
Keep watching this space…..”more on subvention”..
Regards
Finance_Doc

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