In a bid to give a fillip to the housing sector, the government has raised the maximum amount that a Central government employee can borrow from the government for house-building to Rs 25 lakh from Rs 7.5 lakh earlier. It has also increased the amount that a Central government employee can borrow for home expansion to 34 months of basic pay to a maximum of Rs 10 lakh from Rs 1.8 lakh earlier. The Centre’s current staff strength is about 50 lakh. Further, the cost ceiling limit of the house which an employee can construct or purchase with borrowing from the government has been raised to Rs 1 crore, with a provision of upward revision of 25% in deserving cases. Earlier it was Rs 30 lakh.
“This attractive package is expected to incentivise the government employee to buy house/flat by taking the revised (house building advance) rules along with other bank loans, if required. This will give a fillip to the housing infrastructure sector,” a government release said. The government has now made both spouses, if they are Central government employees, eligible to take HBA either jointly, or separately. Earlier only one spouse was eligible for HBA. The government has now set the rate of interest on HBA at one rate of 8.50% (simple interest) compared with the earlier four slab interest rates ranging from 6% to 9.50% for different slabs of HBA which ranged from Rs 50,000-7,50,000. “This rate of interest shall be reviewed every three years,” the release said.
The government has also withdrawn the clause of adding a higher rate of interest at 2.5% above the prescribed rate during sanction of HBA. Earlier, the employee was sanctioned an advance at an interest rate of 2.5% above the scheduled rates with the stipulation that if conditions attached to the sanction including those relating to the recovery of amount are fulfilled completely to the satisfaction of the competent authority, a rebate of interest to the extent of 2.5% was allowed. The government also said the methodology of recovery of HBA shall continue as per the existing pattern recovery of principal first in the first 15 years in 180 monthly instalments and interest thereafter in the next five years in 60 monthly instalments.