The Central Government has reduced the interest on House Building Advance from 8.5 percent to 7.9 percent for its employees, an official statement stated on Thursday. The reduction was made to boost housing demand.
According to the the Union Housing and Urban Affairs Ministry's statement, the new interest rate has come into force from 1 October.
"The rate of interest on House Building Advance (HBA) has been reduced from existing 8.5% to 7.9% for government employees for a period of one year, irrespective of the loan amount of HBA," the ministry said.
The House Building Advance is allowed for permanent employees and all those temporary employees who have rendered five years of continuous service.
"The ministries/departments are delegated powers to sanction House Building Advance to their employees in accordance with the HBA rules," it stated.
The decision to lower the interest on housing advance and link it to linked to the 10-year G-sec yields was announced by Finance Minister Nirmala Sitharaman last month.
"Government servants contribute to a major component of demand for houses. This will encourage more government servants to buy new houses," she had said.