7th Pay Commission – House Building Advance (HBA) Interest Rate FY 2203-24: The interest rate of House Building Advance (HBA) to Central Government Employees for the Financial Year 2023-24 is higher than what it was for FY 2022-23.
The Ministry of Housing and Urban Affairs has set the HBA interest rate for Central Government employees at 7.5 per cent for advances sanctioned during FY 203-24.
“In pursuance to revision of interest rate by Ministry of Finance, Dept of Economic Affairs vide O> 5(2)-B(PD)/2-23 dated 20.03.2023, the rate of interest applicable on House Building Advance sanctioned to Central Government Employees during FY 2023-24 (i.e. 1st April 2023 to 31st March 2024) will be 7.5% till further orders,” the Ministry of Housing & Urban Affairs had said in an Office Memorandum dated march 27, 2023.
For FY 2022-23, the interest rate of HBA was 7.1%. Earlier during FY 2021-22, the rate of interest on HBA to Central Government Employees was set at 7.9% for 18 months (from October 1 2020 to March 31, 2022).
HBA is provided to Central Government Employees as per the recommendations of the 7th Pay Commission. As per rules, Central Government Employees interest-bearing advances for various purposes such as the construction of a new house, purchase of a plot for constructing a house, expansion of living accommodation, purchase of ready-built houses or flats from housing boards, development authorities, registered builders etc. (More details here)
Central Government Employees can also take HBA for repayment of loans or advances taken from a Government Bank or HUDCO or private sources of the construction of the property has commenced.
The facility helps employees of the Central Government to avail of low-interest advances compared to home loans, which are currently available at around 9% interest.
How much HBA an employee can get
A Central Government Employee can get up to 34 months of basic pay subject to a maximum ceiling of Rs 25 lakh as House Building Advance. In the cost of the property (house/flat/plot etc) is less than Rs 25 lakh then the employee will be eligible to get only the least amount as HBA.
The government sets the interest rate of House Building Advance based on the 10-year G-Sec yield.