Mantri Developers and PNBHFL nexus exploits hundreds of home buyers

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Mantri Developers Pvt. Ltd (MDPL), in collaboration with Punjab National Bank (PNB) through its housing finance subsidiary PNBHFL, has been deceiving customers for the past few years. MDPL has launched multiple ‘subvention’ schemes for a few apartment projects launched in past few years in Bangalore.

In a subvention scheme,

·         There are three parties-the buyer, the banker and the developer.

·         Buyer books the property by paying 20-25% money upfront.

·         Remaining amount (80-75%) is paid by the bank (PNBHFL in this case) to the developer (MDPL) upfront in the form of loan to the buyer.

·         Developer (MDPL) agrees to bear the interest cost till possession or for a fixed period mentioned in the buyer-seller agreement.

·         Developer (MDPL) got all the money upfront and has little incentive to finish the project on time. In case of any delay/default, it is always the buyer who gets into trouble. 

·         In some cases, the developer (MDPL) assures the buyer a return 2X of the customer’s contribution at the end of three years and promises to close the bank loan in case the buyer does not intend to retain the property. (

Since such schemes were floated in the market by well known real estate developers backed by a nationalized bank like PNB, hundreds of customers including me invested in this scheme.

To a layman, it appears to be a very good scheme especially when there is a tripartite agreement between developer, buyer and bank on the terms and conditions.

It came to our attention later that such subvention schemes where the loan is disbursed upfront by the bank to the builder is not recommended by Reserve Bank of India (RBI).

In Sep 2013, RBI had via a circular ( issued an advisory and warned all banks and financial institutions against such ‘innovative’ housing finance schemes. RBI also provided a detailed explanation on how such schemes can be detrimental to end customers besides the financial institutions themselves.

Unfortunately PNB along with Mantri Developers, through its housing finance subsidiary PNBHFL, ignored the advisory from RBI and kept the home buyers in dark regarding the risks associated with such schemes. PNBHFL continued to offer these subvention schemes and disbursing loans upfront to developers even after RBI advisory and without doing due-diligence on Mantri Developers’ intent and credibility as a branded builder.

Since Mantri Developers already received all money in upfront, partly as a down payment from buyer and partly as a loan on behalf of buyer, now it is least interested about finishing the construction of such projects offered via subvention schemes.

·         As per communication by Mantri Developers to buyers, most apartment projects with these schemes are getting delayed by 4-5 years from expected completion date. That means, the developer has agreed that the total probable completion time would be around 7-8 years as of now. They are not giving dates in the later months of 2021 while we are still in mid of 2017.

·         The interest cost which was paid to buyer by Mantri Developers and then buyer is expected to pay the bank, has a lag of 6-7 months, for example, Mantri Developers pays the EMI for month of Dec to the buyer by June/July, whereas every month the buyer has to pay loan EMI on time to PNBHFL. This leads to financial pressure on the buyer as not paying EMI on time will lower the buyer’s credit rating.

·         Mantri Developers has stopped bearing the interest cost of the loan unilaterally.

·         Buyers who were assured return 2X of their contribution at the end of three years (as per agreement) have not even got there invested money back (20-25% paid in upfront during booking), leave alone any returns on investment.

·         Mantri Developers is neither constructing apartments on time nor providing timely EMIs to buyers. It is diverting buyers’ hard earned money to its other businesses and projects at the buyers’ expense.

·         Since home loan is much cheaper than business loan, Mantri Developers is using buyers’ home loan money for its own business instead of constructing homes. (This isn’t legally correct to get loans from banks at home-loan rates and use those for other purposes.)

·         Mantri Developers has continued to float multiple other schemes to lure new buyers for Energia, Webcity and Serenity. Details can be found at: . The new schemes are slightly different and Mantri Developers has taken up a different approach for cheating new customers. Now, they are only asking 10% of the total cost of the apartments and that they will keep paying the required EMI.

Looking at the history that Mantri Developers has been maintaining since last 3-4 years, and their projection of next 4 years for the existing projects, it is clear that Mantri Developers is collecting money from each customer and not utilizing the funds only for constructing apartments.

 Project details: Mantri Webcity, Near Southern Asian Bible College,, Kothanur Post, Hennur Main Road, Bengaluru, Karnataka 560077

We request NHB, RBI and Registrars of Companies to take necessary steps for inquiry against all these irregularities on both Mantri Developers and PNBHFL.

We understand, there may be many other builders and many other banks/HFCs that would be following similar business approach and we all as a group request the appropriate authorities to look into those cases and take necessary steps to save many home buyers.