Current · Source: Reserve Bank of India · RBI/2010-11/481 · issued 21 Apr 2011 · ~2 min read
Quick answerRBI expands the 1% interest subvention scheme on housing loans to cover loans up to ₹15 lakh for houses costing up to ₹25 lakh, up from earlier limits of ₹10 lakh and ₹20 lakh respectively. Banks must implement immediately.
The rule, in the simplest words
The government gives a 1% discount (subvention) on home loan interest for loans up to ₹15 lakh (15 lakh rupees).
The house you buy with this loan must cost no more than ₹25 lakh (25 lakh rupees).
Banks must start using these new higher limits right away, without waiting.
All other rules of the discount program stay the same as before.
How it plays out — a real example
A credit & lending officer in Indore, Priya, updates her branch's loan forms to show the new limits: a customer can now get a subsidized loan of up to ₹15 lakh for a house costing up to ₹25 lakh. She explains to a young couple that their ₹12 lakh loan for a ₹22 lakh flat qualifies for the 1% interest discount, saving them money each month.
What changed
The Union Budget 2011-12 proposed liberalising the existing 1% interest subvention scheme on housing loans. The loan limit was raised from ₹10 lakh to ₹15 lakh, and the house cost cap was increased from ₹20 lakh to ₹25 lakh. All other terms and conditions of the scheme remain unchanged.
What it means for you
Banks can now offer subsidised housing loans to a wider set of borrowers, potentially boosting affordable housing demand. Lenders must update their internal guidelines and communicate the revised limits to all branches to ensure uniform implementation. The unchanged terms mean existing processes for claiming subvention from the government remain the same.
What you must do
Issue immediate instructions to all controlling offices and branches to implement the revised loan and house cost limits.
Update internal systems and loan application forms to reflect the new thresholds of ₹15 lakh loan and ₹25 lakh house cost.
Ensure all other terms and conditions of the subvention scheme are communicated and followed as before.
Acknowledge receipt of this circular to the RBI as directed.
Who it affects
All Scheduled Commercial Banks (excluding Regional Rural Banks), Borrowers seeking affordable housing loans, Bank branches handling housing loan applications
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
What are the new loan and house cost limits under the subvention scheme?
The housing loan limit is increased to ₹15 lakh, and the cost of the house should not exceed ₹25 lakh, up from the earlier limits of ₹10 lakh and ₹20 lakh respectively.
Do any other terms of the scheme change?
No, all other terms and conditions of the housing loan interest subvention scheme remain unchanged.
When should banks implement these changes?
Banks are advised to implement the revised guidelines immediately upon receipt of this circular.
📜 This document’s life story (2 recorded events, each backed by RBI’s own words)
RBI’s words: “The Scheme is extended up to March 31, 2012.”
📜 Read the original circular — full text as issued by RBI
RBI/2010-11/481
RPCD.SME & NFS. BC. No. 62/06.11.01/2010-11
April 21, 2011
The Chairman/Managing Director/
Chief Executive Officer
All Scheduled Commercial Banks
(excluding Regional Rural Banks)
Dear Sir
Scheme of 1% interest subvention on housing loans upto Rs. 10 lakh - Guidelines
Please refer to our circulars RPCD.SME & NFS.BC.No.16/06.11.01/2010-11 dated August 9, 2010 and RPCD.SME & NFS.BC.No.52/06.11.01/2010-11 dated February 8, 2011 on the captioned subject.
2. In para 43 of the Union Budget Speech of 2011-12, it has been proposed to liberalise the existing scheme of interest subvention of 1 per cent on housing loans by extending it to housing loan upto Rs.15 lakh where the cost of the house does not exceed Rs.25 lakh from the present limit of Rs.10 lakh and Rs.20 lakh respectively.
3. You are therefore advised to issue necessary instructions to your Controlling Offices and Branch Offices to ensure that these guidelines are implemented immediately. The other terms and conditions of the housing subvention scheme remain unchanged.
4 . Please acknowledge the receipt.
Yours faithfully
(C.D.Srinivasan)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2010-11/481 · issued 21 Apr 2011. The plain-English explanation above is BankPulse’s own independent summary.
Issue immediate instructions to all controlling offices and branches to implement the revised loan and house cost limits.
💻 IT / Systems
Update internal systems and loan application forms to reflect the new thresholds of ₹15 lakh loan and ₹25 lakh house cost.
📜 Compliance
Ensure all other terms and conditions of the subvention scheme are communicated and followed as before.
Acknowledge receipt of this circular to the RBI as directed.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Branch Manager at a bank this circular applies to (All Scheduled Commercial Banks (excluding Regional Rural Banks), Borrowers seeking affordable housing loans, Bank branches handling housing loan applications), your first concrete step on “Housing Loan Interest Subvention Scheme Expanded” is: “Issue immediate instructions to all controlling offices and branches to implement the revised loan and house cost limits.” (RBI issued this 21 Apr 2011).
Action required: Issue immediate instructions to all controlling offices and branches to implement the revised loan and house cost limits.
Action required: Update internal systems and loan application forms to reflect the new thresholds of ₹15 lakh loan and ₹25 lakh house cost.
Action required: Ensure all other terms and conditions of the subvention scheme are communicated and followed as before.
Action required: Acknowledge receipt of this circular to the RBI as directed.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=6353&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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