Finance ministry asks public sector banks to tweak Indira Awas Yojana
FM has asked public sector banks to include Yojana houses under the differential rate of interest (RoI) scheme and lend up to Rs 20,000 for every house sanctioned under the scheme at an interest rate of 4%.
By TNN |
NEW DELHI: In a move that will encourage housing for the poor under the Indira Awas Yojana (IAY) in a major way, the finance minister has asked public sector banks to include Yojana houses under the differential rate of interest (RoI) scheme and lend up to Rs 20,000 for every house sanctioned under the scheme at an interest rate of 4%.
The Bharat Nirman programme, which started in 2005-06, has a target of constructing six million houses over four years. Against this target, 4.11 million houses have been constructed up to December and the number will be 5.18 million by March-end. National Housing Bank (NHB) will be entrusted with the task of working on the viability of interest rate subsidy and initiate talks with housing finance companies and banks. Banks would also be asked to fix stringent criteria for home buyers seeking home loans.
���The differential rate of interest for housing banks under the Indira Awas Yojna is a very useful step, whereby lower rate of interest would supplement the subsidy advanced by the government for construction of houses for poor,��� NHB executive director RV Verma said. He also said the move would not put any additional burden on public sector banks as they would set off the loss owing to lower interest rates against other loans. ���Cross-subsidisation of loans would help mitigate any loss for the banks,��� he added.
Apart from extending benefits to housing for the poor, the finance minister has also enhanced the subsidy per unit in respect of new houses sanctioned after April 2008, from Rs 25,000 to Rs 35,000. Also, the subsidy for upgradation of houses will be increased from Rs 12,500 per unit to Rs 15,000.
The Bharat Nirman programme, which started in 2005-06, has a target of constructing six million houses over four years. Against this target, 4.11 million houses have been constructed up to December and the number will be 5.18 million by March-end. National Housing Bank (NHB) will be entrusted with the task of working on the viability of interest rate subsidy and initiate talks with housing finance companies and banks. Banks would also be asked to fix stringent criteria for home buyers seeking home loans.
���The differential rate of interest for housing banks under the Indira Awas Yojna is a very useful step, whereby lower rate of interest would supplement the subsidy advanced by the government for construction of houses for poor,��� NHB executive director RV Verma said. He also said the move would not put any additional burden on public sector banks as they would set off the loss owing to lower interest rates against other loans. ���Cross-subsidisation of loans would help mitigate any loss for the banks,��� he added.
Apart from extending benefits to housing for the poor, the finance minister has also enhanced the subsidy per unit in respect of new houses sanctioned after April 2008, from Rs 25,000 to Rs 35,000. Also, the subsidy for upgradation of houses will be increased from Rs 12,500 per unit to Rs 15,000.
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