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
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.