Banking and monetary regulator, Reserve Bank of India has said that incentives on home loans upto Rs 10 lakh would not be allowed to non resident Indians (NRIs).
Under normal circumstances, banks give interest subsidy of 1% on home loans up to Rs 10 lakh.
"Housing loans extended to NRIs for construction of farm houses, and to staff members of the banks are not eligible for subsidy under the scheme," a notification by the apex bank read.
The union budget 2009-10 had declared an interest subvention of 1% on home loans up to Rs 10 lakh given that the cost of the entire unit did not exceed Rs 20 lakh.
"While calculating the interest subsidy, each disbursement may be treated as a separate loan and for each disbursement, subsidy claim may be made for twelve instalments," the RBI said.
