The banking regulator, Reserve Bank of India (RBI), has directed all banks to give home loan borrowers an interest subsidy of 1 percent on loans up to Rs. 15 lakh. Last fiscal, government liberalized the interest subvention scheme on home loans till the amounts of Rs. 15 lakh in cases where the house does not cost more than Rs. 25 lakh.
RBI issued a notification to the banks stating that the scheme will remain in force till March 31, 2013. For the current fiscal, there is a budgetary provision of Rs. 400 crore on the scheme, which has been approved by the Union Cabinet headed by Prime Minister, Manmohan Singh.
The extent of subsidy on a borrower has been capped at Rs. 14, 912 for a loan amount of Rs. 15 lakh and Rs. 9, 925 for loans of Rs. 10 lakh. The interest subsidy scheme will be applicable on all home loans sanctioned in the current financial year.
The task of implementing the scheme with public sector and regional rural banks and housing finance companies lies with the National Housing Bank, which is the nodal agency responsible for implementation of these schemes.