New Delhi: The Union Cabinet on Tuesday approved the Budget proposal to extend one percent interest subsidy scheme for housing loans up to Rs 15 lakh by one year.
"When interest rates have risen, even one percent relief is a relief for the middle class and lower middle class," Home Minister P Chidambaram told reporters.
The limit of subsidy for an individual borrower would be Rs 14,912 for a loan of Rs 15 lakh, and Rs 9,925 for a loan of Rs 10 lakh. The extended scheme will benefit all housing loans availed in the current financial year.
Chidambaram said a large number of people have benefited from the one per cent interest subvention and "whoever borrows now will get the benefit of one percent".
In view of the shortage of housing for low income groups in major cities and towns, then Finance Minister Pranab Mukherjee in his Budget 2012-13 had proposed to extend the scheme of interest subvention of one percent on housing loans up to Rs 15 lakh by another year.
The benefit of the scheme is available to a borrower if cost of the house does not exceed Rs 25 lakh.
Earlier, the interest benefit was given on loans of up to Rs 10 lakh provided the cost of house does not exceed Rs 20 lakh. In 2011-12, the government liberalised the scheme and increased the loan limit to Rs 15 lakh and the cost of house to Rs 25 lakh.
Also in the Budget 2012-13, the government had announced enhancement of the limit of indirect finance under priority sector from Rs 5 lakh to Rs 10 lakh.
With Agency Inputs