Govt looks to increase loan amount to low-income group
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The Ministry of Housing & Urban Poverty Alleviation aims to target around a million households through the Rajiv Rin Yojana (RRY), which provides subsidised loans to people from economically weaker sections for buying houses.
Under the revised terms , a household from the economically weaker section (EWS) will be provided a loan of up to Rs 3,00,000 for buying a house with a five per cent interest subsidy a year and a repayment period of up to 20 years.
Under the same scheme, households in the low-income group (LIG) category will get loans up to Rs 5,00,000 and with the same terms.
"We have floated a Cabinet note on increasing the loan amount in the EWS and LIG category, which is under inter-ministerial consultation now. We have said it that we expect around a million people to benefit from the scheme. That is our target but it will depend on the funds we get from the government in the Budget," said a senior housing and urban poverty alleviation ministry official, adding that the implementation will also depend on the willingness of banks to lend.
At present, loan limit in the EWS category is Rs 1,00,000 and in the LIG category is Rs 1,80,000.
The RRY was earlier called Interest Subsidy Scheme for Housing the Urban Poor and started in February 2008 with a view to provide long-term financing for housing needs to the urban poor.
Up to December 2011, 8,734 beneficiaries have been covered under the scheme. The beneficiaries have been mainly from Andhra Pradesh, Chhattisgarh, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan, Tamil Nadu, Uttar Pradesh and Kerala.
The primary reason for the lukewarm response to the scheme has been due to lack of willingness on the part of banks to provide loans to EWS and low-income segments.
However, the ministry is hopeful of getting a big response this time. The ministry feels that the government's announcement in November to raise the bar on annual income required to qualify for benefits under its existing housing schemes for EWS and LIG category will help in getting more beneficiaries.
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