Pass on 1% rate subsidy on home loans: RBI

MUMBAI: The Reserve Bank on Monday asked banks to put in place a suitable mechanism to provide the benefit of the 1% interest subsidy granted by the government on home loans to buy a house of up to Rs 20 lakh.

“Banks are advised to put in place a suitable mechanism to ensure that the eligible borrowers avail of the benefit of interest subvention for one housing unit only,” RBI said in a notification. It further said that after sanctioning and disbursing eligible loans under the scheme, banks will claim disbursement of subsidy from the Reserve Bank on a monthly basis.

In order to encourage the housing sector, finance minister Pranab Mukherjee in his Budget for 2009-10, had announced a scheme under which the government would provide interest subvention of 1% on housing loans of up to Rs 10 lakh for one year, provided the cost of the unit was less than Rs 20 lakh. The scheme, which was initially for a period of one year up to September 30, 2010, was extended till March 31, 2011.

The government had made a provision of Rs 1,000 crore for 2009-10 and Rs 700 crore for the current fiscal.