1% Interest Subvention on Housing Loans Extended to March 2012
Current · Source: Reserve Bank of India · RBI/2011-12/255 · issued 04 Nov 2011 · ~2 min read
Quick answerRBI extends the 1% interest subvention scheme on housing loans up to Rs. 10 lakh until March 31, 2012. Loans sanctioned between Oct 2009 and Mar 2011 follow old rules. Banks can continue claiming under the original scheme; revised instructions for new claims will follow.
The rule, in the simplest words
The 1% interest help (government reduces the loan interest by 1%) on home loans up to 10 lakh rupees is now allowed until 31 Mar 2012.
If a loan was approved and given between 1 Oct 2009 and 31 Mar 2011, it follows the old rules: loan amount up to 10 lakh rupees and total house cost up to 20 lakh rupees.
Banks can keep asking the RBI to pay back the interest help for old‑scheme loans the same way as before; new ways to claim will be told later.
All big scheduled commercial banks (but not regional rural banks) and their loan teams must follow these points.
How it plays out — a real example
Rohit, a home‑loan officer in Mumbai, receives an application on 15 Mar 2012 for a 9 lakh‑rupee loan to buy a house. Because the loan is after the extension date, he gives the borrower the 1% interest help under the current scheme and files the reimbursement claim using the existing procedure, while noting that RBI will send new claim instructions later.
What changed
The scheme's validity has been extended to March 31, 2012. Loans sanctioned and disbursed between October 1, 2009 and March 31, 2011 are excluded from the new liberalised scheme and will be governed by the previous instructions, which limited loans to Rs. 10 lakh with project cost up to Rs. 20 lakh.
What it means for you
Banks can continue offering the 1% interest subvention on eligible housing loans up to Rs. 10 lakh for an additional period. For loans under the old scheme, existing reimbursement procedures remain unchanged. Banks must await separate revised instructions for claiming reimbursement under the new scheme.
What you must do
Extend the 1% interest subvention scheme on housing loans up to Rs. 10 lakh until March 31, 2012.
Treat loans sanctioned and disbursed between Oct 1, 2009 and Mar 31, 2011 under the old scheme (loan up to Rs. 10 lakh, project cost up to Rs. 20 lakh).
Continue claiming reimbursement for old scheme loans as per original instructions.
Await revised instructions from RBI for claiming reimbursement under the new scheme.
Who it affects
All Scheduled Commercial Banks (excluding RRBs), Housing loan borrowers seeking subvention benefits, Bank operations teams handling subsidy claims
❓ Common questions
What is the new deadline for the 1% interest subvention scheme?
The scheme has been extended up to March 31, 2012.
Are loans sanctioned between Oct 2009 and Mar 2011 eligible under the new scheme?
No, those loans are outside the new liberalised scheme and will be treated under the old instructions, which required loan amount up to Rs. 10 lakh and project cost up to Rs. 20 lakh.
How should banks claim reimbursement for loans under the new scheme?
Banks should continue using the original scheme's claim process for now. Revised instructions for new scheme claims will be issued separately.
📜 Read the original circular — full text as issued by RBI
RBI/2011-12/255
RPCD.MSME & NFS. BC.No . 29/06.11.01/2011-2012
November 4, 2011
The Chairman / Managing Director
All Scheduled Commercial Banks (excluding RRBs)
Madam/ Dear Sir,
Scheme of 1% interest subvention on housing loans upto Rs. 10 lakh – G uidelines
Please refer to our circular RPCD.SME & NFS. BC. No. 62/06.11.01/2010-11 dated April 21, 2011 on the captioned subject. In this connection, it is now clarified as under:
a) The Scheme is extended up to March 31, 2012.
b) Loans sanctioned and disbursed between October 01, 2009 and March 31, 2011 are outside the ambit of the new liberalised Scheme and they will be treated as per old instructions (ie. loans up to Rs.10.00 lakh with project cost up to Rs.20.00 lakh)
Banks may continue to claim reimbursement, at present, as per the original Scheme. For claims in respect of the new Scheme, revised instructions would follow.
2. All other terms and conditions of the interest subvention Scheme remain the same.
3. Please acknowledge receipt.
Yours faithfully,
(C.D.Srinivasan)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2011-12/255 · issued 04 Nov 2011. The plain-English explanation above is BankPulse’s own independent summary.
Example: if you are a Compliance officer at a bank this circular applies to (All Scheduled Commercial Banks (excluding RRBs), Housing loan borrowers seeking subvention benefits, Bank operations teams handling subsidy claims), your first concrete step on “1% Interest Subvention on Housing Loans Extended to March 2012” is: “Extend the 1% interest subvention scheme on housing loans up to Rs. 10 lakh until March 31, 2012.” (RBI issued this 04 Nov 2011).
Circular: RBI/2011-12/255 -- 1% Interest Subvention on Housing Loans Extended to March 2012
Issued: 04 Nov 2011
Action required: Extend the 1% interest subvention scheme on housing loans up to Rs. 10 lakh until March 31, 2012.
Action required: Treat loans sanctioned and disbursed between Oct 1, 2009 and Mar 31, 2011 under the old scheme (loan up to Rs. 10 lakh, project cost up to Rs. 20 lakh).
Action required: Continue claiming reimbursement for old scheme loans as per original instructions.
Action required: Await revised instructions from RBI for claiming reimbursement under the new scheme.
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
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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=6808&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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