Tue Mar 18 12:09:39 UTC 2025: ## Supreme Court Orders CBI Probe into Bank-Builder Nexus in Home Loan Scam
**New Delhi:** The Supreme Court has ordered a Central Bureau of Investigation (CBI) probe into allegations of collusion between banks and builders, leading to financial distress for thousands of homebuyers. The court expressed serious concerns about the alleged practice of banks disbursing home loan funds directly to builders even before construction began, violating Reserve Bank of India (RBI) guidelines.
Homeowners have approached the court claiming they are being forced to pay EMIs despite not receiving possession of their flats due to construction delays. The court, while acknowledging the July 2024 ruling preventing coercive EMI recovery for homebuyers without possession, noted that this order is largely unenforced.
Justice Surya Kant, heading the bench, stated that the court would not label any institution as inherently good or bad, but emphasized the urgent need for a thorough investigation. “Thousands of people are crying. We can’t wipe their tears, but we can address their issues,” he said. The CBI has been instructed to submit a detailed plan outlining its approach to the investigation.
The court sharply criticized the alleged practice of banks releasing significant portions of loan amounts (60% in one cited example) without ensuring sufficient construction progress. Justice Kant questioned the lack of accountability, suggesting a clear “quid pro quo” between banks and builders. While the financiers’ representative suggested halting interest charges until possession, the court dismissed this as insufficient to address the systemic issue impacting countless individuals.
The Supreme Court’s decision to appoint an amicus curiae highlights the scale of the problem, and the next hearing is scheduled in two weeks. The investigation promises to shed light on the alleged widespread malpractice and potentially lead to significant reforms in the home loan sector.
First Piper 