The Resurgence of Subvention Schemes: How BNPL is Revolutionizing the Real Estate Market
With the rise of Buy Now Pay Later (BNPL) options, the concept of subvention schemes is making a comeback in the real estate industry. Here's how it's changing the game for homebuyers.
Buy Now Pay LaterBnplSubvention SchemesReal Estate MarketHousing FinanceReal Estate MumbaiJun 06, 2024
Subvention schemes, also known as 20 80 schemes, were popular in the early 2000s. The concept was simple homebuyers would pay 20% of the property value upfront, while the remaining 80% would be financed by the developer or a bank. The catch? The buyer wouldn't have to pay any EMIs until possession of the property. This model seemed like a win-win for both developers and buyers, as it allowed for quicker sales and easier financing options.
However, the subvention model soon became synonymous with delayed deliveries, and the sector was plagued by scams and fraudulent activities. The RBI eventually stepped in, issuing guidelines to curb the misuse of subvention schemes.
The Rise of Buy Now Pay Later (BNPL)
Fast-forward to the present, and the real estate market is witnessing a resurgence of sorts. The Buy Now Pay Later (BNPL) model, popularized by fintech companies, is gaining traction in the industry. BNPL allows homebuyers to purchase a property with minimal upfront payment, deferring the majority of the payment to a later date.
While BNPL isn't exactly the same as subvention schemes, the similarities are hard to ignore. Both models offer easier financing options, and both have the potential to stimulate sales in the real estate market. But what sets BNPL apart is its regulatory framework and transparency.
How BNPL is Revolutionizing the Real Estate Market?
The BNPL model is a game-changer for the real estate industry in several ways
Increased affordability BNPL makes property purchases more accessible to a wider audience, as buyers don't need to shell out a large sum upfront.
Flexibility BNPL options offer flexible repayment tenures, allowing buyers to customize their payments according to their needs.
Transparency BNPL models are more transparent than traditional subvention schemes, with clear repayment terms and minimal hidden charges.
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The Indian real estate market has been undergoing a transformation in recent years, driven by factors such as demonetization, GST, and RERA. The COVID-19 pandemic has further accelerated the shift towards digital platforms, making way for innovative financing options like BNPL.
Frequently Asked Questions
What is the Buy Now Pay Later (BNPL) model?
The BNPL model allows homebuyers to purchase a property with minimal upfront payment, deferring the majority of the payment to a later date.
How is BNPL different from traditional subvention schemes?
BNPL models are more transparent than traditional subvention schemes, with clear repayment terms and minimal hidden charges.
What are the benefits of BNPL in the real estate market?
BNPL makes property purchases more accessible, offers flexible repayment tenures, and provides transparency in repayment terms.
Is BNPL regulated by the RBI?
Yes, the RBI has issued guidelines for BNPL models, ensuring a more secure and regulated environment for homebuyers.
Can BNPL help stimulate sales in the real estate market?
Yes, BNPL options can increase affordability and flexibility for homebuyers, leading to increased sales in the real estate market.
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