New Delhi, Oct. 25: In a move to fulfill the twin objective of boosting credit demand and improve affordability of housing to borrowers the Government of India has approved the proposal under 1% interest subvention scheme to further liberalize the limit for home loans to Rs 1.5 million from earlier limit of Rs 1 million.
However, this will be applicable where the cost of the house does not exceeding Rs 2.5 million. Earlier, cost limit was Rs 2 million. Government has made budgetary provision of Rs 5 billion for the financial year 2011-12.
The Union Cabinet has designated National Housing Bank (NHB) as the nodal agency for implementation the scheme both for Scheduled Commercial Banks and Housing Finance Companies.
The 1% interest subvention of housing loans was approved by the Cabinet in September, 2009 with limit of Rs 1 million and maximum house cost not exceeding Rs 2 million .
Now, with the increase in the eligibility limit of the housing loan, the limit of subsidy for an individual borrower would increase to Rs 14,865 for a loan of Rs 1.5 million on reducing balance basis from the present limit of Rs 9,910 for a loan of Rs 1 million.