Home loan interest subsidy scheme to run the whole fiscal

The union cabinet today approved a proposal to extend the scheme of interest subvention of 1 per cent on loans up to Rs15 lakh on house purchases of a maximum value of Rs25 lakh for the financial year 2012-13. The cabinet also approved amendments to the operational part of guidelines for release of funds.

The maximum limit for interest subvention for individual borrowers will be Rs14,912 for a loan of Rs15 lakh. The government will spend Rs400 crore on this score.

The extended scheme will benefit all house loans availed in financial year 2012-13.

The government has made a budgetary provision of Rs400 crore for financial year 2012-13 for implementing the scheme.

To scheme has been introduced to boost the housing sector, at a time when the Reserve Bank of India has been forced to hike interest rates amidst soaring inflation.

Earlier, this scheme was for housing loans up to Rs10 lakh where cost of the house did not exceed Rs20 lakh. The government had spent Rs3,000 crore during 2011-12 on interest subvention.

The Rs10-25 lakh slab has the highest share in the total housing loan portfolio. It also has a very low share in banks' non-performing assets.