"When interest rates have risen, even one per cent relief is a relief for the middle class and lower middle class," Home Minister P Chidambaram told reporters while briefing about last evening's Cabinet meeting.
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.
The Cabinet, chaired by Prime Minister Manmohan Singh, had yesterday approved extension of the scheme of the interest subvention of one per cent on housing loans up to Rs 15 lakh for the financial year 2012-13.
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 per cent".
A budgetary provision of Rs 400 crore has been made for the financial year 2012-13 for implementing the scheme. The National Housing Bank (NHB) is the nodal agency for implementing the scheme both for banks and housing finance companies.
In his Budget, the then Finance Minister Pranab Mukherjee had proposed to extend the scheme, announced in 2011-12, by one year in view of the shortage of housing for low income groups in major cities and towns.
Earlier, the interest benefit was given on loans of up to Rs 10 lakh provided the cost of the house did 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 the house to Rs 25 lakh.