3% interest subsidy on home loans approved

“The government is committed in its mission to ensure housing for all by 2022. The interest subvention will not only reduce the equated monthly instalment (EMI) burden on the poor but will also help them in further construction or expansion of their current homes,” Rural Development Minister Narendra Singh Tomar said. It will also create employment opportunities in rural housing sector, he added. 

The scheme was approved by Cabinet on Tuesday, within a month of Prime Minister Narendra Modi’s announcement during his address to  the nation on the New Year’s eve. Interest subsidy would be available to every rural household which is not covered under the PMAY(G), under which the government aims to construct about 44 lakh houses, the Rural Development Ministry said in an official statement. The scheme would also enable people in rural areas to construct new houses or add to their existing houses to improve their dwelling units. 

National Housing Bank (NHB) would implement the scheme and the government would provide net present value of the interest subsidy of 3 per cent to it. NHB will, in turn, pass it to the primary lending institutions, like scheduled commercial banks, NBFCs and others. 

Under the scheme, the government would also take necessary steps for proper convergence with PMAY(G) including technical support to beneficiary through existing arrangements.