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The Union Cabinet today approved the proposal under 1% interest subvention on housing loan scheme liberalising the limit of housing loan upto Rs.15 lakh where cost of the house does not exceeding Rs.25 lakh from the present limit of Rs.10 lakh and Rs.20 lakh respectively, and designating National Housing Bank (NHB) as the Nodal Agency (NA) for implementing the scheme both for Scheduled Commercial Banks and Housing Finance Companies. 

A budgetary provision of Rs.500 crore has been made for the financial year 2011-12 for implementing the scheme. 

Background: 

The existing scheme of 1% interest subvention of housing loans upto Rs.10 lakh, provided the cost of the housing unit does not exceed Rs.20 lakh was approved by the Cabinet in September, 2009. The scheme provides interest subsidy on housing loans as a measure to generate additional demand for credit and to improve affordability of housing to borrowers in the lower and middle income groups. Reserve Bank of India and National Housing Bank were designated as the nodal agencies for implementing the scheme for Scheduled Commercial Banks and Housing Finance Companies respectively. 

Consequent upon raising the eligibility limit of the housing loan, limit of subsidy for an individual borrower would increase to Rs.14,865 for a loan of Rs.15 lakh on reducing balance basis from the present limit of Rs.9910 for a loan of Rs.10 lakh. 



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