NEW DELHI: The Cabinet Committee on Economic Affairs on Friday approved a scheme aimed at providing a five per cent interest subsidy for the urban poor for home loans up to Rs. 1 lakh.
The subsidy has been fixed keeping in mind the repayment capacity of this section, Home Minister P. Chidambaram told journalists here.
The total subsidy, amounting to Rs. 1,100 crore, is expected to leverage an institutional finance of Rs. 3,870 crore.
The loan repayment period will be between 15 and 20 years.
3.10 lakh more units
The Interest Subsidy Scheme for Housing the Urban Poor (ISHUP) is expected to result in creation of an additional stock of 3.10 lakh houses — 2.13 lakh units for the economically weaker section (EWS) and 0. 97 lakh units for low income group households over the next four years.
The National Housing Bank and the Housing and Urban Development Corporation will be the nodal agencies for disbursement and monitoring of the subsidy.
Banks, micro finance institutions and others will have the option of availing themselves of the resources.
In 2005-06, when national housing shortage was estimated at about 24.7 million units, the government launched the Jawaharlal Nehru Urban Renewal Mission for providing affordable houses, under which 1.5 million houses are being built for the economically weaker section.
Under the programme, slums have also been upgraded and will be given basic municipal services. This would entail around Rs. 40,000 crore, half of which will be borne by the Centre.