One of the several sweeteners the finance minister announced during Budget 2011 has become reality. On 21 April, the Reserve Bank of India (RBI) notified scheduled commercial banks to implement the new guidelines pertaining to the interest subvention or subsidy on home loans with immediate effect.

Accordingly, homebuyers will now get an interest subvention of 1% on home loans up to Rs. 15 lakh for buying or constructing a home within the overall cost of Rs. 25 lakh. This subvention will be available to loans sanctioned between 1 April 2011 and 31 March 2012. The subsidy will be applicable on repayment of the first 12 equated monthly instalments (EMIs); thereafter, the borrower will have to bear the applicable interest.

The subvention will be granted on both fixed and floating interests rate loans. The scheme will cover all states and Union territories and will extend to both rural and urban areas.