Transcript 1 % Interest Subvention Scheme

Scheme of 1% Interest
Subvention for Housing
Loans upto Rs. 15 Lakh
1% Interest Subvention Scheme for Housing
Loans
Introduction
 From FY 2009-10, the Government of India introduced an
interest subvention Scheme of 1% p.a. for the first year on all
individual housing loans up to Rs.10 lakh, provided the cost of
the unit does not exceed Rs. 20 lakh .
 From FY 2011-12 the limit of individual housing loans has been
enhanced to Rs.15 lakh, provided the cost of the unit does not
exceed Rs. 25 lakh.
 All regions of the States & Union Territories in the country,
including rural & urban areas will be covered under the
Scheme.
Objective
 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 lower &
middle income groups.
 To provide relief to prospective home owners and improve home
ownership in the specified target segment.
Duration of the Scheme
 In starting the Scheme was operational for a period from 1st
October, 2009 to 30th September, 2010.
 Now the Scheme has been extended up to 31st March 2013.
Eligibility
 Interest subvention of 1 percent will be available on
housing loans up to Rs. 10 lakh (Now enhanced to
Rs. 15 lakh) to individuals for construction/
purchase of a new house or extension of an existing
house.
 The cost of construction/price of the new house/
extension does not exceed Rs. 20 lakh (Now
enhanced to Rs. 25 lakh) .
 All such loans sanctioned and disbursed, during
the period of Scheme shall be eligible for the said
interest subsidy.
Agencies Involved
 Implementing Agencies (IAs) – The Scheme
will be implemented through Scheduled
Commercial Banks (SCBs) and Housing Finance
Companies (HFCs) registered with the National
Housing Bank (NHB).
Nodal Agencies – For the years 2009-11, the
RBI and the NHB were the Nodal Agencies for
this Scheme for SCBs and HFCs, respectively.
From FY 2011-12 NHB has been designated as
Sole Nodal Agency for this Scheme for both HFCs
and SCBs.
Claim Admissibility
 After sanctioning and disbursing the eligible loans, the
IAs will claim subsidy from the nodal agency in the
prescribed format on monthly/ consolidated basis.
 The subsidy amount on the disbursed loan amount will
be sanctioned to the IAs by the respective Nodal Agencies
on monthly basis on receipt of the claim and the
necessary information in the prescribed format.
Release of Funds from GoI
- The
Government of India will release the subsidy amount to
the Nodal Agencies based on demand for sanction of
subsidy received from the nodal agencies 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 NA 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 given, etc., as per the formats prescribed by
RBI/NHB for the purpose.
NHBs’ Initiative
 NHB has issued revised Guidelines to all Scheduled Commercial Banks
(including Public Sector Banks, Private Sector Banks and Foreign
Banks in India) and all HFCs registered with NHB for speedy
implementation of the Scheme and submission of subsidy claims to
NHB.
 NHB has also requested Convener SLBC of various states to include the
Scheme as an regular agenda item.
 NHB has prepared an excel sheet with features like automated checking
of sanctioned loan amount not exceeding 15 lakh, cost of house not
exceeding 25 Lakh and calculation of subsidy amount. To facilitate the
Banks and HFCs to submit their claims without any discrepancy, the
same has been uploaded on NHB’s Website.
 To reduce the time lag in disbursement of the subsidy amount, NHB
has proposed to place upfront certain amount of funds with public
Sector Banks
Status of Claims
 For Financial Year 2011-12, claims amounting to
Rs. 308.08 crore has been submitted to DFS, MoF.
 For Financial Year 2011-12, DFS, MoF had
released interest subsidy amounting to 300 crore
for onward disbursement to Banks/HFCs.
 Total Budget allocation under the Scheme for FY
2011-12 was Rs. 300 crore and the same has been
achieved with the cooperation of various
stakeholders.
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