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
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.