1% Interest Subvention on Housing Loans Up to Rs 15 Lakh Extended
Current · Source: Reserve Bank of India · RBI/2012-13/214 · issued 18 Sep 2012 · ~2 min read
Quick answerRBI extended the 1% interest subvention scheme for housing loans up to Rs 15 lakh (house cost up to Rs 25 lakh) until March 31, 2013. A Rs 400 crore budget provision was made for FY 2012-13. NHB remains the nodal agency. Banks must implement vigorously and submit claims promptly.
The rule, in the simplest words
Banks can give a 1% interest subsidy [reduction in interest rate] on housing loans up to Rs 15 lakh
The house cost should not exceed Rs 25 lakh to be eligible for the subsidy
Banks must submit claims to the National Housing Bank (NHB) to get the subsidy amount
The scheme is valid until March 31, 2013
How it plays out — a real example
A housing loan officer in Mumbai can help a borrower buy a house worth Rs 20 lakh with a loan of Rs 15 lakh, and then claim the 1% interest subsidy from the NHB, reducing the borrower's interest burden. The officer must ensure the claim is submitted promptly to the NHB. This will make housing loans more affordable for the borrower.
What changed
The interest subvention scheme, effective from FY 2011-12, was liberalized to cover housing loans up to Rs 15 lakh where the house cost does not exceed Rs 25 lakh. The scheme was extended by the Government of India to remain in force until March 31, 2013, with a budgetary provision of Rs 400 crore for 2012-13.
What it means for you
Banks can now offer a 1% interest subsidy on eligible housing loans, reducing the effective cost for borrowers. This is expected to boost affordable housing lending. Banks must ensure timely claim submission to NHB to receive the subvention amount and avoid delays in benefit pass-through.
What you must do
Implement the scheme vigorously for all eligible housing loans up to Rs 15 lakh with house cost up to Rs 25 lakh.
Submit claims to National Housing Bank (NHB) expeditiously to ensure timely reimbursement.
Give wide publicity to the scheme to reach eligible borrowers and maximize uptake.
Acknowledge receipt of this circular to RBI as instructed.
Who it affects
All Scheduled Commercial Banks (excluding Regional Rural Banks), Borrowers seeking housing loans up to Rs 15 lakh, National Housing Bank (NHB) as nodal agency, Regional Rural Banks (RRBs) and Housing Finance Companies (HFCs) are also covered under the scheme via NHB
❓ Common questions
What is the maximum loan amount eligible for the 1% interest subvention?
Housing loans up to Rs 15 lakh are eligible, provided the cost of the house does not exceed Rs 25 lakh.
Who is the nodal agency for implementing this scheme?
The National Housing Bank (NHB) is the sole nodal agency for Scheduled Commercial Banks, Regional Rural Banks, and Housing Finance Companies.
Until when is the scheme valid?
The scheme has been extended by the Government of India and will remain in force up to March 31, 2013.
📜 Read the original circular — full text as issued by RBI
RBI/2012-13/214
RPCD.MSME&NFS.BC.No. 30/06.11.01/2012-13
September 18, 2012
The Chairman/Managing Director/
Chief Executive Officer
All Scheduled Commercial Banks
(excluding Regional Rural Banks)
Dear Sir / Madam,
The Scheme of 1% Interest Subvention on Housing Loans up to Rs. 15.00 lakh
Please refer to our circular RPCD.SME&NFS.BC.No.29/06.11.01/2011-12 dated November 04, 2011 on the captioned subject. In this connection, it is now advised that:
The interest subvention scheme has been liberalized with effect from FY 2011-12 by extending it to housing loans up to Rs.15 lakh where the cost of the house does not exceed Rs.25 lakh. The Scheme has since been extended by Government of India and will remain in force up to March 31, 2013.
A Budgetary provision of Rs. 400.00 crore has been made under the Scheme for the year 2012-13 by Government of India.
The National Housing Bank is the sole Nodal Agency for implementation of the Scheme for Scheduled Commercial Banks, Regional Rural Banks and Housing Finance Companies.
All SCBs are advised to implement the Scheme vigorously, submit their claims to NHB expeditiously and extend the benefits of the Scheme to all eligible borrowers / beneficiaries. SCBs are further requested to give wide publicity to the Scheme.
2. Please acknowledge receipt.
Yours faithfully,
(C.D. Srinivasan)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2012-13/214 · issued 18 Sep 2012. 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 Regional Rural Banks), Borrowers seeking housing loans up to Rs 15 lakh, National Housing Bank (NHB) as nodal agency, Regional Rural Banks (RRBs) and Housing Finance Companies (HFCs) are also covered under the scheme via NHB), your first concrete step on “1% Interest Subvention on Housing Loans Up to Rs 15 Lakh Extended” is: “Implement the scheme vigorously for all eligible housing loans up to Rs 15 lakh with house cost up to Rs 25 lakh.” (RBI issued this 18 Sep 2012).
Circular: RBI/2012-13/214 -- 1% Interest Subvention on Housing Loans Up to Rs 15 Lakh Extended
Issued: 18 Sep 2012
Action required: Implement the scheme vigorously for all eligible housing loans up to Rs 15 lakh with house cost up to Rs 25 lakh.
Action required: Submit claims to National Housing Bank (NHB) expeditiously to ensure timely reimbursement.
Action required: Give wide publicity to the scheme to reach eligible borrowers and maximize uptake.
Action required: Acknowledge receipt of this circular to RBI as instructed.
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.
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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=7576&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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