With an eye on the general elections, the UPA government announced today its scheme to provide five per cent interest subsidy on loans up to Rs 1 lakh to meet housing needs of urban poor, with a special focus on socially underprivileged, taken during Eleventh Plan period. The scheme, approved by the Cabinet Committee of Economic Affairs, will lead to creation of additional housing stock of 3.10 lakh houses for economically weaker section (EWS) and low-income group (LIG) households over the next four years. The subsidy was fixed keeping in mind the repayment capacity of the section of society, home minister P Chidambaram said. The loans up to Rs 1 lakh will be collateral-free and no prepayment or service charges will be levied. Of the total, 2.13 lakh dwelling units will be for the EWS and 0.97 lakh for LIG housing. The total subsidy, which would amount to Rs 1,100 crore, is expected to leverage institutional finance of Rs 3,870 crore. The loan will be available for construction and acquisition of houses for EWS and LIG categories, defined as households having an average monthly income up to Rs 3,300 and between Rs 3,301 and Rs 7,300. The loan repayment period would vary between 15 and 20 years.The criteria to identify eligible beneficiaries will soon be developed by the housing ministry in consultation with the Planning Commission and state government representatives. “One of the criteria will be land availability with adequate provision of water and sanitation facilities,” a senior official said. However, priority will be given to applicants planning to buy houses in co-operative group housing societies or those promoted by employees’ welfare and labour housing organisations. The dwelling unit will be accepted as primary security and no third-party guarantee will be required. NHB and Housing and Urban Development Corporation will be the nodal agencies, while banks, micro finance institutions and others will have the option to avail of the resources.
