Interest Rate of and House Building Advance

Applicable Rate of Interest and Methodology of Recovery of House Building Advance

I. The Interest on Housing Building Advance for the financial year 2017-18 onwards shall be 8.50%. This shall be reviewed every three years to be notified in Consultation with Ministry of Finance.

II. The methodology of recovery of HBA shall Continue as per the existing pattern of recovery of principal first in the first fifteen years in not more than 180 monthly instalments and interest thereafter in next five years in not more than 60 monthly instalments. The advance carries simple interest from the date of payment of first instalment.

III. All cases of subsequent tranches/installments of HBA being taken by the employee in different financial years shall be governed by the applicable rate of interest in the year in which the HBA was sanctioned, in the event of change in the rate of interest.

Note: The clause of adding a higher rate of interest at 2.5% (two-point five percent) above the prescribed rate during sanction of House Building Advance, as reproduced below, stands withdrawn.

“Sanction should stipulate the interest 2.5% over and above the Scheduled Rates With the stipulation that if conditions attached to the sanction including those relating to the recovery of amount are fulfilled Completely to the Satisfaction of Competent authority, a rebate of interest of the extent of 2.5% Will be allowed”