Housing loan interest subsidy: Centre to spend Rs 60,000 crore over the next five years

The Centre is mulling spending Rs 60,000 crore to provide subsidised loans for small urban housing over the next five years, reported Reuters. As per the report, the banks are likely to roll out the scheme in a couple of months, ahead of key state elections later this year and general elections due in mid-2024.

During the Independence Day speech in August, Prime Minister Narendra Modi had announced the plan to provide relief in bank loans for first-time homebuyers.

"We are coming up with a new scheme in the coming years that will benefit those families that live in cities but are living in rented houses, or slums, or chawls and unauthorised colonies," PM Modi had said in his August speech.

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Reuters mentioned that the scheme will provide an annual interest subsidy of between 3-6.5% on up to Rs 9 lakh of the loan amount. Housing loans below Rs 50 lakh availed for a tenure of 20 years will also be eligible for the proposed scheme.

"The interest subvention will be credited upfront to the housing loan account of beneficiaries. The scheme proposed till 2028 is close to finalisation and will require approval of federal Cabinet," one government official told Reuters.

The official also mentioned that the quantum of subsidised credit will depend on demand for such homes and about 2.5 million loan applicants in low-income groups in urban areas will benefit from the scheme.

The report further mentioned that bank officials have started identifying the beneficiaries of the scheme.