Scheme of 1% Interest
Subvention on Housing Loan up to Rs. 10 lakhs
The Finance Ministry had announced a scheme of 1%
interest Subvention on Housing Loan up to Rs.10 lakhs. An allocation of Rs.1,000
crores was also announced for the purpose. Pursuant to the above mentioned
announcement, the Government of India has approved a Scheme of Interest
Subvention on Housing Loan up to Rs.10 lakhs, provided the cost of unit does
not exceed Rs.20 lakhs. Department of Financial Services has issued guidelines
for implementation of the Scheme.
The objective of the Scheme is to provide Interest
Subsidy on Housing Loan as a measure to improve affordability of housing to
eligible borrowers and generate additional demand for credit. The Scheme will
be implemented throughout the country and will be in operation for a period
of 1 year beginning Oct 1, 2009 and upto Sept 30, 2010. Interest Subsidy of
1% will be applicable for first 12 months of eligible loans sanctioned and
disbursed during the currency of the scheme viz. Oct 1, 2009 to Sept 30,
2010.
It will be implemented through the Scheduled Commercial
Banks (SCBs) and Housing Finance Companies (HFCs) registered with National
Housing Bank (NHB). The Reserve Bank of India (RBI) and NHB will be the nodal
agencies for the Scheme for SCBs and HFCs respectively. After sanctioning and
disbursing the eligible loans, the implementing agencies will claim disbursement
of subsidy from respective nodal agency on monthly basis.
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Guidelines
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Sub: Scheme of 1% interest subvention on
housing loans upto 15
lakh with cost of the house not exceeding 25
lakh – Guidelines regarding
In order to stimulate demand for credit for housing in
the middle & lower income segment of population in the country, the
Government has implemented an interest subvention of 1% on all individual
housing loans of upto 10
lakh, provided the cost of the unit does not exceed 20
lakh. For FY 2011-12 the Scheme has been extended for housing loan upto 15
lakh, where the cost of house does not exceed 25
lakh. The Scheme recognizes that cut in interest rates has an important role
to play in reducing EMIs of borrowers and creating additional demand for
housing. All regions of the States & Union Territories in the
country, including rural & urban areas will be covered under the Scheme.
THE SCHEME
Objective – The objective of the Scheme is to provide
interest subsidy on housing loan as a measure to generate additional demand
for credit and to improve affordability of housing to eligible borrowers in
the middle & lower income groups. The Scheme is expected to provide
relief to prospective home owners and improve home ownership in the specified
target segment.
Eligibility - Interest subvention of 1 percent will be
available on housing loans upto 10
lakh to individuals for construction/purchase of a new house or extension of
an existing house / resale of a flat or House, provided the cost of
construction/price of the new house/extension does not exceed 20
lakh. For FY 2011-12 interest subvention of 1% will be available for housing
loans upto 15
lakh, provided the cost of house does not exceed 25
lakh are eligible under the Scheme. All such loans sanctioned and disbursed,
during the period of the Scheme shall be eligible for the said interest
subsidy.
Duration of the Scheme – The Scheme is in operation for
a period starting from 1st October, 2009 to 31st March, 2012.
Interest subsidy – Subsidy of 1 per cent will be
defined as reduction in interest rate by 100 basis points per annum from the
existing rate of interest for a particular amount & tenor. It will
be applicable to the first twelve instalments of all such loans sanctioned
and disbursed during the currency of the Scheme and will be computed for 12
months on the disbursed amount. The subsidy amount will be adjusted (after
receiving subsidy from Government of India) in the principal outstanding,
irrespective of whether the loan is on fixed or floating rate basis.
Implementing Agencies (IAs) – The Scheme will be
implemented through Scheduled Commercial Banks (SCBs) and Housing Finance
Companies (HFCs).
Nodal Agency –NHB will be the common Nodal Agency for
this Scheme for SCBs and HFCs.
Publicity & Awareness Generation - The IAs will
give wide publicity to the Scheme bringing out its salient features &
benefits to the borrowers.
Terms for loan and subsidy:-
1.
The interest subsidy
of 1 percent per annum will be admissible for the first year on the amount
sanctioned and disbursed against the eligible housing loans. In case the loan
amount is disbursed in parts (instalments), the interest subsidy will be
calculated for one year and claimed separately for every installment of the
loan disbursement falling within the operating period of the Scheme.
2.
The interest subsidy
will be calculated on the interest chargeable at the time of disbursement of
the loan.
3.
The agreed rate of
interest would be arrived at by the IAs keeping in view the NHBs guidelines,
if any, for loans upto 10
lakh (for FY 2011-12 upto 15
lakh).
4.
The borrowers may
choose fixed or floating rate of interest.
5.
The mode of
disbursement of the loan will be decided by the lending IAs as per the
requirement of the borrowers.
6.
The IAs will deduct
the subsidy amount from the principal loan amount of the borrower (after
receiving it from Nodal agency) and charge interest on the net amount of loan
at the agreed rate of interest.
7.
The amount of
reduction in the principal amount as a result of interest subsidy will be
explained to the borrower by the SCBs/HFC officials. IAs will provide
each borrower, covered under the Scheme, a statement which will make him/her
understand the amount given as subsidy, how the subsidy has been adjusted and
the impact of the subsidy on her/his EMIs.
8.
It will be the
responsibility of the IA concerned to ensure security of the loan amount.
9.
The IAs will follow
the appraisal, documentation, etc., as per their approved policies and
procedures including those for risk assessment.
10.
In case a loan is
foreclosed before one year the subsidy amount will be received from borrowers
and returned to Government through Nodal Agency.
11.
In case of
default/account turning NPA the subsidy will be provided to borrower on
pro-rata basis and remaining subsidy will be returned to Government of India
through nodal agency. In case account turns NPA after 12 months, subsidy
would not be returned, as Scheme provides 1% interest subsidy for 12 months
only.
12.
The benefit of
interest subvention is restricted to only one housing unit for a single
eligible borrower.
Claim Admissibility - After sanctioning and disbursing
the eligible loans, the IAs will claim disbursement of subsidy from the Nodal
Agency by submitting their claims on the prescribed format on monthly basis
in hard and soft copy both. The subvention amount on the disbursed loan
amount will be sanctioned to the IAs by the Nodal Agency on monthly basis on
receipt of the claim and the necessary information in the prescribed format.
Final reimbursement claim on Government - The final
quarterly reimbursement claim format the IAs can be expected to be in the
quarter immediately after completion of the Scheme.
Release of Funds from Government of India - The
Government of India will release the subsidy amount to the Nodal Agency based
on demand for sanction of subsidy received from the Nodal Agency on quarterly
basis.
Utilisation Certificates - The IAs will be required to
ensure proper end-utilization of the funds and to submit utilization
certificates, to their respective Nodal Agency against the amount of the
interest subsidy released to them. The utilization certificate will be
submitted in the prescribed form.
Inspection of Accounts - The IAs will flag all the
loans covered under the Scheme in their books of accounts for the purpose of
inspection by the specified authority.
Monitoring and Evaluation – All SCBs and HFCs will
submit a monthly consolidated return to the National Housing Bank, specifying
the number of accounts, amount of loan disbursed, subvention claimed, etc. as
per the formats prescribed by NHB for the purpose. The NHB will scrutinise
the monthly statement and send it the Department of Financial Services (DFS),
Ministry of Finance.
The impact of the Scheme will be evaluated through the
Nodal Agency at the end of the operation of the Scheme.
Implementation and power to remove difficulties –
If any doubt arises on the interpretation of any paragraph of this Scheme or any instructions issued there under, the Central Government shall resolve the doubt and the decision of the Central Government shall be final.
If any difficulty arises in giving effect to the
provisions of the Scheme or any instructions issued there under, the Central
Government may issue order on anything which appears to it to be necessary or
expedient for the purposes of removing the difficulty.
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Friday, July 12, 2013
Scheme of 1% Interest Subvention on Housing Loan up to Rs. 10 lakhs
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