With a view to make finance cheaper for weaker sections of the society, the government will soon announce new scheme interest subsidy scheme under which eligibility cap for the 5 percent interest subvention scheme will be enhanced to Rs 5 lakh from the present Rs 1 lakh.
Under the interest subvention scheme, the government shares the interest burden on a loan for the particular target segment and such schemes presently exist for a slew of sectors including agriculture and sugar.
The move is likely to benefit poor to purchase house as over 58 percent of people from the economically weaker sections and over 39 percent from the low-income groups do not have access to housing.
Financial Services Secretary G S Sandhu stated that banks cannot go below their cost of funds and to make credit cheaper, the government has to give the interest subsidy. Sandhu also asserted that the government will soon announce affordable housing policy. Banks' ability to finance the housing requirement is constrained by a slew of factors and there is a need to look at alternatives like pension money, insurance companies etc., participating in the sector. He further added that the move to liberalise the taxation regime for the real estate investment trusts (REITs) would be a game changer helping smaller, retail investors to participate in the sector.