The government today announced a scheme to provide interest subsidy of 5 percentage points for home loans up to Rs 1 lakh taken by the urban poor. This will mean that the urban poor will pay only 3.5 per cent interest on such loans.
The Cabinet Committee on Economic Affairs (CCEA) approved providing mortgage loans for those belonging to the economically weaker segment (EWS) and low-income group (LIG).
The subsidy would cost the government Rs 1,100 crore and was expected to bring institutional finance of Rs 3,870 crore to this neglected segment up to March 2012, a press statement said.
It will make the housing dreams of economically weaker sections in urban areas come true as the subsidy has been fixed keeping in mind the repayment capacity of this section of the society, Home Minister P Chidambaram told reporters here.
“The interest subsidy scheme is expected to supplement the efforts of the government through the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) to comprehensively address the housing shortage,” Chidambaram said.
Around 1.5 million houses are being built for EWS at an estimated cost of Rs 40,000 crore, with the Centre sharing 50 per cent of the project cost.
The state-owned banks had recently announced lower interest rates for housing loans in two categories — for loans up to Rs 5 lakh and for loans of Rs 5-20 lakh.
The loan repayment period for the urban poor would vary between 15 and 20 years. The scheme will result in creation of 310,000 houses for EWS and LIG households over the next four years.
The National Housing Bank and Housing & Urban Development Corporation Ltd will be the nodal agency for disbursement of the subsidy and monitoring the progress.
Finance institutions like banks, housing finance companies, micro-finance institutions, etc, will have the option to avail of the resources of either of the nodal agencies during the period of the scheme.
