What is subvention scheme?
Also called: subvention plan, 80:20 scheme, no EMI till possession, pre-EMI subvention, tripartite agreement scheme
In a subvention scheme the bank disburses most of your home loan to the builder early, and the builder pays the interest (pre-EMI) until possession. You pay a small amount upfront and nothing more until you get the flat, at least on paper.
'Pay 10%, no EMI till possession' is how it is usually advertised. Behind the slogan sits a tripartite agreement signed by the buyer, the builder and the lender. The bank releases 70% to 80% of the loan to the builder, often well ahead of construction, and the builder agrees to pay the interest on that money until handover. Legally you are a borrower from day one. The builder simply picks up the bill for the first few years.
It works until the builder stops paying. When a project stalls, the pre-EMI payments stop with it, and the bank turns to the only party who took the loan: you. Thousands of buyers in Noida, Greater Noida and Gurugram have faced EMIs on loans of ₹50 lakh to ₹1 crore for half-built flats, with their CIBIL scores damaged by defaults they didn't cause. The National Housing Bank told housing finance companies in 2018 to stop upfront disbursements under such schemes, and in 2025 the Supreme Court, hearing petitions from NCR buyers, directed the CBI to investigate tie-ups between builders and lenders in subvention projects.
If you are still considering one, read the tripartite agreement line by line. It should say the bank will disburse only against construction stages, never a lump sum at booking. It should also spell out what happens if the builder misses pre-EMI: ideally the bank pursues the builder and does not report you to credit bureaus. Track every pre-EMI payment through your own loan statement, not the builder's assurances.
The scheme is rarely free, either. The interest the builder pays is usually built into the flat's price, so compare the subvention price with the CLP price for the same unit.
A buyer books an ₹80 lakh flat in Greater Noida West on a 10:90 subvention plan. The bank releases ₹64 lakh to the builder within months, and when the builder stops paying the pre-EMI of about ₹45,000 a month, the bank demands it from the buyer.
Treating 'no EMI till possession' as no liability. The loan is in your name, so the builder's default becomes yours.
Questions people ask about subvention scheme
Who pays the EMI in a subvention scheme if the builder defaults?
The buyer. The loan agreement is between you and the bank, so it will recover from you and report missed payments against your name.
Are subvention schemes banned?
Not outright, but lenders have been told not to disburse far ahead of construction, and the schemes are under close scrutiny after the NCR cases.