Kerala State Government Employees Fresh Housing Loans under HBA Scheme 

Kerala State Government Employees were entitled for Housing Loans under House Building Advance (HBA Scheme) till July 2018. Thereafter, the Government of Kerala directed the employees to approach scheduled commercial bank / NBFCs working in the state for availing fresh or additional housing loans.  The employees will continue to enjoy housing loans as per their service conditions even after shifting to banks. Employees can enjoy income tax benefits on principal and interest under section 80 C and section 24 B, as pedr the income tax norms.  

The general process to be followed by the Kerala state government employees for availing housing loans linked to HBA scheme from banks is mentioned below for better understanding. It may be noted that there can be minor variations in the scheme features and process among banks. 

Which are the Banks/ NBFCs extending housing loans to Kerala state government employees linked to HBA?

As per the government directive, Kerala state government employees can approach any scheduled commercial bank/ NBFC functioning in the state. The principal portion of loans that had been outstanding under the HBA scheme was taken over by Punjab National Bank and Federal Bank recently.  A similar arrangement was done by the government earlier with SBI and Canara Bank.  Though all banks/ NBFCs in the state can be approached for the loan by the Kerala state government employees, branches of these banks could be more familiar with the housing loan schemes for Kerala state government employees. 

What are the documents to be submitted by the Kerala state government employees for housing loans? 

1.    Applicant must open an account with the chosen bank and take up with SPARK (Service and Payroll Administrative Repository for Kerala) to direct salary credit to the account. Said salary account shall be maintained with the bank throughout the life cycle of the loan. On sanctioning the loan, monthly EMI will be recovered from this account. 
2.    The applicant must approach the DDO (Drawing and Disbursing Officer) / competent authority for NOC for availing the loan from the said bank. 
3.    The NOC along with other documents for availing housing loan shall be submitted to the branch for further processing.  The documents in this regard shall be finalized in consultation with the branch. 

Please refer the following articles for a general idea about various aspects related to housing loans:

Owning a House Is a Celebration- Purposes For Which Housing Loans Are Sanctioned
Stipulations To Be Satisfied For Housing Loans
Matters to be considered while purchasing land or house

What is the maximum eligibility for loan under HBA scheme/ Housing loan scheme of bank?  

1.    The eligibility of the employee for the loan under HBA scheme will be as announced by the government from time to time.  As of now, 50 times basic pay (as on 31st March of previous year) up to a maximum of Rs.20L is the maximum eligibility under the scheme.  Eligible loan amount under the scheme will be mentioned in the NOC issued by DDO.  However, banks will be assessing whether the borrower is entitled for the amount based on the repayment capacity, considering age and salary drawn etc.  
2.    Banks have freedom to grant additional loan over and above the amount mentioned in the NOC, if the borrower is otherwise eligible for additional loan based on the project cost, salary income etc as specified by the bank for housing loan scheme.  However, the government subsidy will be limited to the loan amount for which NOC is issued. 
3.    If additional loan is sanctioned, separate accounts will be opened by banks.

What are the eligibility criteria fixed by the Kerala Government for employees to become eligible for subsidy linked HBA loans? 

•    Kerala State Government Employees and teachers confirmed in pensionable service are eligible for the loans under the scheme.  All India Service Officers of the State Cadre are also eligible under the scheme. (Employees on Part time Service, Aided School Service, Board, Company, Corporation and University are not eligible for HBA scheme ).
•    The employee should have a minimum service of  5 years with a minimum remaining service of  50 months
•    Residential Property should be owned/acquired in own name or Spouse or jointly with the Spouse. Applicants should not have another house anywhere in India in the name of self/spouse/minor children.
•    Loan shall be for purchase/construction of House/flat, for construction of house in already owned land, for purchase of land & construction.
•    Employees will have to create equitable mortgage with the asset acquired. Further, they will have to agree for execution of documents, CERSAI registration, asset insurance, CIBIL reporting etc as per the norms of the housing loan scheme of individual banks. 

What is the process for interest subsidy claim in the housing loan for Kerala state government employees linked to HBA scheme?

Housing loan sanctioning bank will not have any role in claiming interest subsidy. The applicant/ borrower will have to make necessary arrangement for claiming interest subsidy under HBA scheme loans from the government.  Irrespective of whether or not subsidy is released by the government, the EMI fixed at the time of sanction shall be ensured in the account of the employee to ensure prompt repayment. Any default in repayment can affect credit history of the borrower and CIBIL records.

To ensure that the Kerala State government employees continue to enjoy housing loans with interest rate as per the norms of HBA scheme, the government will be providing interest subsidy to employees. This is to offset the additional interest that banks may levy as per the norms of the scheme approved by individual banks. 

1.    The employee shall submit a copy the loan Sanction Order to respective DDOs
2.     DDO will forward the Sanction Order to Finance Department and  SPARK for processing subsidy request as per Government guidelines
3.    The assessed interest subsidy will be credited to the salary accounts of the employee along with monthly salary. 
4.    The employee will be eligible for interest subsidy for remaining service period up to a maximum of 18 years. 
5.    The present interest subsidy is 3.25% per annum (simple interest) on the Principal loan amount sanctioned or maximum eligible amount, whichever is lower. 
6.    For matters like delay in release, errors in amount released, non-release etc, the employee shall take up with DDO/ government department concerned. 

The norms related to interest subsidy, including the percent of interest subsidy and the loan scheme may vary from time to time based on the Government guidelines. Now Is the Right Time For Home Loan Borrowers-Ignore Interest Rate Directions