There is some cheering news at least for some of the home loan borrowers who have been faced with steady increases in interest rates.
The Union Cabinet on Tuesday decided to liberalise the norms under its one per cent interest rate subsidy scheme for housing loans.
Following the decision, the subsidy would be available for loans up to Rs.15 lakh as against the present limit of Rs.10 lakh.
The Cabinet also decided to relax the eligibility criteria in regard to the cost of the house. The subsidy would be extended for houses costing up to Rs.25 lakh. At present, the scheme is applicable to only those houses that cost less than Rs.20 lakh.
Announcing this, Union Minister and Cabinet spokesperson Ambika Soni said a budgetary provision of Rs.500 crore had been made for the implementation of the scheme for the current financial year. The National Housing Bank would be the nodal agency for implementing the scheme for both scheduled commercial banks and housing finance companies.
The relief came even as the Reserve Bank of India announced a hike of 25 basis points in the repo rates for banks, which would mean a corresponding increase in interest burden on housing and other loans.
The interest subsidy scheme was introduced in September 2009 as a measure to generate additional demand for credit and to improve affordability of housing to borrowers in the lower and middle income groups.