The government is planning to spend Rs 60,000 crore to provide loans for small urban housing over the next five years, the report said.
Banks are likely to roll out the programme in a couple of months, ahead of key state elections late this year and general elections due in mid-2024, Reuters reported. Last month, the Centre had slashed cooking gas prices for households by about 18% to rein in inflation ahead of elections.
Prime Minister Narendra Modi of India announced the plan to provide relief in bank loans for first-time homebuyers in a speech in August to mark Independence Day, but its details have not been reported.
The scheme will offer an annual interest subsidy of between 3-6.5% on the amount of a loan amount up to 9 lakh. Under the proposed programme, individuals who earn Rs 50 lakh for a tenure of 20 years will be eligible for housing loans, sources said.
Modi vowed not to back down in his speech, saying that corruption is a key issue in India.
The officials didn't want to be named as the scheme is under finalisation.
Lenders have not been provided any specific lending targets, but a meeting with government officials is likely soon, said one bank official.
Banks have started to identify beneficiaries, they said, adding that the move could help increase lending in the affordable housing sector within the home loan portfolio.
This is the first time that the government has offered interest subsidies for lower-income borrowers in urban areas. A similar scheme was launched in 2017-2022, with 12.27 million homes sanctioned under it.