Rs 60,000-cr home loan interest subsidy scheme under study

Delhi/Mumbai, September 25

The Central government is considering spending Rs 60,000 crore ($7.2 billion) to provide subsidised loans for small urban housing over the next five years, two government sources said.

Banks are likely to roll out the scheme in a couple of months, ahead of key state elections later this year and General Election due in mid-2024. In August, the government cut cooking gas prices for households by about 18% to rein in inflation ahead of elections.

Loans below Rs 50 lakh to be eligible

• The scheme will offer an annual interest subsidy between 3% and 6.5% on up to Rs 9 lakh of the loan amount
• Housing loans below Rs 50 lakh availed for a tenure of 20 years will be eligible for the proposed scheme
• The scheme could benefit 25 lakh loan applicants in low-income groups in urban areas

Prime Minister Narendra Modi had announced the plan in his Independence Day speech, but its details have not been previously reported.

The scheme will offer an annual interest subsidy of between 3% and 6.5% on up to Rs 9 lakh of the loan amount. Housing loans below Rs 50 lakh availed for a tenure of 20 years will be eligible for the proposed scheme, the sources said.

“The interest subvention will be credited upfront to the housing loan account of beneficiaries. The scheme proposed till 2028 is close to finalisation and will require approval of the Cabinet,” one government official said.

The scheme could benefit 25 lakh loan applicants in low-income groups in urban areas but the quantum of subsidised credit will depend on demand for such homes, the official said.

“We are coming up with a new scheme in the coming years that will benefit those families that live in cities but are living in rented houses, or slums, or chawls and unauthorised colonies,” Modi had said in his August speech.

The officials did not want to be named as the scheme is under finalisation.

Mails to seek a response from the Ministry of Housing and Urban Development and the Ministry of Finance remained unanswered. — Reuters

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