MUMBAI: Home loans for the underprivileged are set to get more affordable with the government planning a new interest subvention scheme, which will meet part of the home loan burden.
Speaking on the sidelines of a real estate event in Mumbai, finance secretary G S Sandhu said that the government would shortly announce enhanced subvention for affordable home loans. He said that under the scheme, there would be interest subvention up to 5% for loans up to Rs 5 lakh. At present, the interest subvention is available on loans up to Rs 1 lakh.
Speaking at a real estate summit organized by industry body Nardeco here, Sandhu said that the new government had big plans and vision for affordable housing. "A blueprint on affordable housing plan is being prepared and the government is clear that its wants time-bound results," said Sandhu. He said most of the burden falls on public sector banks and real estate investment trusts could be a game-changer for the sector.
"Increasing the loan limit to Rs 5 lakh will vastly increase the utility of such loans. This will enable the underprivileged to take advantage of low-cost housing schemes that will be undertaken by state governments," said a senior official with a public sector bank.
Interest subvention refers to the subsidy that the borrower gets from the government, which makes good the discount given by the lender. The UPA government had introduced a 1% interest subvention in its Budget for 2009-10 in the aftermath of the global financial crisis to revive the economy. The UPA government had also introduced a 3% interest subvention on loans to farmers.
Earlier, speaking at the same event, RBI deputy governor S S Mundra said that the bulk of housing shortage was among the underprivileged and over 58% of the economically weaker sections and over 39% of low-income groups do not have access to housing.