Union Cabinet approved interest subsidy scheme to boost rural housing

The Union Cabinet on 24 January 2017 approved a new scheme to promote rural housing across the country. A decision in this regard was taken at a meeting of the Cabinet chaired by Prime Minister Narendra Modi in New Delhi.

Features of the scheme are -

• Under the scheme, the Union Government will provide interest subsidy to every rural household who is not covered under the Pradhan Mantri Aawas Yojana (Grameen).

• The scheme would enable people in rural areas to construct new houses. The scheme is also applicable to those who are willing improve their dwelling units by adding additional rooms.

• The beneficiary who takes a loan under the scheme would be provided interest subsidy for a loan amount up to Rs 2 Lakhs.

• The National Housing Bank (NHB) will implement the scheme. The NHB is a wholly owned subsidiary of the Reserve Bank of India (RBI).

• The Government would provide net present value of the interest subsidy of 3 per cent to the NHB upfront.

• The NHB will pass the amount to the primary lending institutions such as scheduled commercial banks (SCBs) and non-banking financial companies (NBFCs).

• As a result the equated monthly installment (EMI) for the beneficiary would be reduced.

• The new scheme is expected to improve housing stock in the rural areas, as well as create employment opportunities in rural housing sector.

• Under the scheme, the Government would also take necessary steps for proper convergence with the Pradhan Mantri Aawas Yojana (Grammen) including technical support to beneficiaries through existing arrangements.

About Pradhan Mantri Aawas Yojana (Grammen)

• It was approved by the Union Cabinet on 23 March 2016.

• The project is being implemented with an estimated cost of Rs 81675 crore.

• The scheme is applicable to the entire country except Delhi and Chandigarh.

• Under this scheme, the cost of houses would be shared between the Centre and States in the ratio 60:40 in plain areas and 90:10 for hilly states.