India, April 30 -- The Supreme Court on Tuesday directed the Central Bureau of Investigation (CBI) to undertake a probe to unearth a possible nexus between builders and banks in sanctioning huge amounts under so-called subvention schemes without following any due diligence.

A bench headed by justice Surya Kant passed the order on a bunch of over 170 petitions filed by homebuyers who approached the court complaining that huge loans were disbursed by banks to the builders under the scheme even before construction of the underlying projects was complete. After builders/developers defaulted on getting the flats constructed, the banks demanded EMIs for recovering the loan amounts from the homebuyers.

Subvention schemes involve a tripartite a...