Sudhir Suryawanshi | Thursday, 3 September 2015 – 6:40am IST | Place: Mumbai | Agency: dna | From the print edition

The Maharashtra government has decided to extend all possible help to those looking for a roof above their head. This will be part of Narendra Modi-led Central government’s plans to ensure ‘affordable housing for all by 2020’ by way of reducing interest rate on home loans. The interest rate, according to a senior state government official, will be between 5.6% to 6% on certain portion of the total loan amount.

According to the official, the state government is working with the Central government on the plan. “Many find it difficult paying high-interest EMI and rent as well. Therefore, we are working out a model where we will either provide the home buyers loan or ask the bank to provide the loan at lower interest rate. We may create a separate corpus or may ask the banks to provide loans and the subsidised amount will be paid to them. We have to also seek permission from the central bank to disburse loan at lower interest rate. The proposal is still at the nascent stage,” he said requesting anonymity.

Arundhati Bhattacharya, chairman, State Bank of India (SBI) welcomed the government move. She said it will be difficult for government to work like banks. “I think they will give subsidy and the loan will be disbursed by the banks. Let all the details come out, then only I will able to really comment on it,” Bhattacharya added.

Government official said the interest subsidy will be on some percentage of the loan. “It will not be for the entire loan amount. We want to help those who want to own a house. It will be basically for the lower income group people and affordable housing segment. Once the proposal is prepared, we will submit it to the state cabinet,” he said requesting anonymity.

Sunil Mantri, president, NAREDCO welcomed the government move. “It will boost the affordable housing segment. People will able to buy the houses. Actually, this segment is large. In India, six crore people are in demand of houses in rural areas and two crore in metro cities. It is timely decision,” Mantri said.

Pankaj Kapoor, managing director, Liases Foras real estate research firm said it will be a big boost to property market. “Property market is going through turbulent situation and most of the developers are not getting the capital to start or complete the projects. In Greater Mumbai, there is need of two million houses. Besides, developers will also get cheaper capital for their upcoming projects,” Kapoor said.

Kapoor suggested that this low interest benefit should be given to the first home buyers only. “This is very good scheme and it should be properly implemented. Otherwise, the genuine home buyers will get deprived and other people who already have home will avail the benefits. There should be proper mechanism to check the malpractice. In Singapore also, the government provides home loan at minimal interest rate. Developed countries too keep interest rate of housing loan at less than 3%. We need to follow such models so as to bring to reality ‘house for all by 2020’ slogan,” Kapoor said.

Source: http://goo.gl/PZ6CCa