House Building Advance Interest Rates from 1985

House Building Advance Interest Rates from 1985 – HBA for Central Government Employees – No Automatic Penal Interest inclusion from 2017

 

After implementation of 7th Pay Commission recommendations Govt came up revised House building Advance Rules 2017 in which ceiling for Housing loan for Central Government Employees was increased to Rs. 25 lakh and interest Rates rationalised to 8.5% P.A.
This article discusses about HBA interest Rates charged by Govt from Central Government Employees from the year 1985.

Interest

1. The advances carry simple interest from the date of payment of the first installment.
2. Interest is calculated on the balance outstanding on the last day of each month.
3. If the balance of principal amount is cleared on the 1st or during the middle of a particular month, the interest for that month will be Nil as the Interest Bearing Balance will be Nil.
4. In working out IBBS, if the pay of the month is drawn late due to administrative reasons, recovery should be deemed to have been made in the month following the month to which the pay relates, irrespective of its actual drawal
5. If part of the advance is adjustable from DCR Gratuity, the adjustment should be deemed to have been made on the date of retirement. No interest is chargeable beyond that date.
6. In case a Government servant dies while in service, no interest should be charged against the portion of advance adjusted against the DCR Gratuity, beyond the date of death of the official.

Rate of Interest
From 25 -11-1985, the Government have fixed uniform rates of interest in place of slab rates. The uniform rate of interest to be charged is based on the total amount of advance sanctioned and the rates are as below-

If the sanctioned HBA is upto (1)	Rate of Interest
	25-11-85    to 23-6-87  (2)	24-6-87 to 25-7-90 (3)	25-7-90 To 15-1297 (4)	16-12-97 to 31-3-01 (5)	1-4-01 to 31-3-02 (6)	1-4-02 to 31-3-03 (7)	1-4-03 to 31-3-12 (8)	1-4-12 to 31-3-17 (9)
Rs. 25,000	7%	7%	7 ½%	7 ½%	6 ½%	6%	5%	6%
Rs. 50,000	7 ½%	7%	7 ½%	7 ½%	6 ½%	6%	5%	6%
Rs. 75,000	8%	8%	9%	9%	8%	7 ½%	6 ½%	7 ½%
Rs. 1,00,000	8 ½%	8%	9%	9%	8%	7 ½%	6 ½%	7 ½%
Rs. 1,25,000	9%	9%	10%	9%	8%	7 ½%	6 ½%	7 ½%
Rs. 1,50,000	–	9%	10%	9%	8%	7 ½%	6 ½%	7 ½%
Rs. 2,00,000	–	10%	11%	11%	10%	9 ½%	8 ½%	9%
Rs. 2,25,000	–	10 ½%	11 ½%	11%	10%	9 ½%	8 ½%	9%
Rs. 2,50,000	–	11%	12%	11%	10%	9 ½%	8 ½%	9%
Rs. 5,00,000	–	–	–	11%	10%	9 ½%	8 ½%	9%
Rs. 7,50,000	–	–	–	12%	11%	10 ½%	9 ½%	9 ½%

From 9-11-2017.- The Interest on House 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.
All cases of subsequent tranches/instalments 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.

7. Sanction should stipulate the interest 2(1/2) % 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 the Competent Authority, a rebate of interest to the extent of 2 (1/2) % will be allowed.

7-A. With effect from 9-11-2017, the clause of adding a higher rate of interest at 2.5% (two point five per cent) above the prescribed rate during sanction of House Building Advance, stands withdrawn.

8. The rate of interest prevalent on the date of release of advance / first instalment will be applicable for calculation-of interest.

Rate of interest when enhancement is sanctioned up to 15-12-1997.- Whenever enhanced HBA is sanctioned on the basis of revised orders, the rate of interest will be as per the revised orders for the entire amount of HBA, i.e., amount originally sanctioned plus the enhanced amount.
From 16-12-1997.- The old rate of interest should be levied for the old sanction and the revised rate of interest should be levied for the enhanced amount. However, the revised rate of interest as applicable on the enhanced HBA will be as per the slab applicable to the total sanctioned HBA amount (i.e., amount already sanctioned plus enhanced sanction).
From 1-1-2006.- The rate of interest chargeable in cases of enhancement would be as per the slab applicable to the total sanctioned amount, i.e. amount already sanctioned on or after 1-1-2006 but before 27-11-2008 plus the enhanced sanction. However, the new rate of interest would be chargeable only on collective amount that would remain outstanding on grant of enhancement of HBA, i.e., the unpaid portion of previously sanctioned HBA plus the enhancement so granted. Thus, the amount of HBA that has already been re-paid on old rates will not attract the fresh interest charges.
Rebate in interest for “small family norms”.- The rate of interest on HBA will be 1/2% less than the normal rate to such employees who themselves or their spouses undergo voluntary sterilisation subject to certain conditions, vide Section III.