NRIs, bank staff not eligible for interest subsidy on housing loans: RBI
08 Feb 2011
Housing loans extended to non-resident Indians (NRIs) for construction of farm houses and to staff members of scheduled commercial banks are not eligible for subsidy under the 1 per cent interest subvention scheme for housing loans up to Rs10 lakh, the Reserve Bank of India (RBI) clarified today.
For calculating interest subsidy, RBI said, each disbursement would have to be treated as a separate loan and for each disbursement, subsidy claim may be made for twelve installments.
For loans fully disbursed at one stroke, subsidy will be provided upfront on the entire amount of the loan disbursed. Subsidy has to be calculated for 12 months period from the date of disbursement of the loan following the reducing balance of EMI, it said.
Loans sanctioned prior to 1 October 2009 would not qualify for reimbursement under the scheme.
RBI has advised banks to use own funds for upfront credit of subsidy till the same is reimbursed by Government of India.
Banks have to submit their claims in the prescribed format (excel) supplied by RBI, on a monthly basis in respect of all housing loans eligible for subsidy under the scheme.
RBI has asked all scheduled commercial banks to implement the scheme vigorously and provide the benefits of the scheme to all eligible customers/beneficiaries expeditiously.
The interest subsidy scheme was introduced as a measure to generate additional demand for credit and to improve affordability of housing to eligible borrowers in the middle and lower income groups. The scheme is expected to provide relief to prospective homeowners and improve home ownership in the specified target segment.
Interest subvention of 1 per cent will be available on housing loans up to Rs10 lakh to individuals for construction or purchase of a new house or extension of an existing house, provided the cost of construction/price of the new house / extension does not exceed Rs20 lakh. The scheme will be in operation till the end of the financial year, ie, 31 March 2011.