Finance Minister Pranab Mukherjee in Budget 2009-10, had announced to provide interest subvention of 1% on housing loans of up to Rs 10 lakh for one year for houses having cost less than Rs 20 lakh. This scheme was announced with a view to push up the housing sector. Initially scheme was for a period of one year up to September 30, 2010, later it was extended till March 31, 2011.
The Reserve Bank of India has instructed banks to introduce a suitable mechanism to provide the benefit of the 1% interest subsidy to the home loan borrowers, announced by the government to buy a house of up to Rs 20 lakh.
RBI said in a notification said, “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.” Notification further said banks after sanctioning and disbursing eligible loans under the scheme can claim the disbursement of subsidy from the RBI on a monthly basis.
For this scheme government has made a provision of Rs 1,000 crore for 2009-10 and Rs 700 crore for the current financial year.
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