First, banks are being advised to offer a ‘basic savings bank deposit account’ with certain minimum common facilities and without the requirement of a minimum balance to all their customers. Second, banks will be mandated not to levy foreclosure charges or pre-payment penalties on home loans extended on a floating interest rate basis. Third, banks are being advised to initiate steps to allot a unique customer identification code (UCIC) number to all their customers.

IDBI Bank has decided to reduce its floating Home Loan rates on new loans, across loan slabs up to a maximum of 75 basis points (bps). The revised rates will come into effect from April 2, 2012. While the floating interest rates in respect of loans up to Rs. 25 lakh have been reduced by 25 bps, the extent of reduction is progressively higher for larger loan amounts: by 50 bps on loans ranging from Rs. 25 lakh to less than Rs.

State Bank of India has decided to allow its old home loan borrowers, paying high interests, to move to the new lower rates, which were offered to other borrowers later, by paying 1% of the outstanding amount as conversion fee.

Government is contemplating to enhance income tax exemption for up to Rs 3 lakh paid as interest on housing loans in a year, from the existing limit of Rs 1.5 lakh. The Budget is scheduled to be tabled on March 16.

There is no bar in section 24 of the Income Tax Act regarding the number of loans on which interest is allowable simultaneously. In fact ,the simple rule of the deduction of interest u/s 24 of the Income Tax Act is that whatever be the interest paid or due on loan borrowed for purchase or construction of house is allowable as deduction. So, whether you take loan from one bank or five banks , all loan should be utilised for buying or constructing the house for allowance of interest paid to all the banks.

Section 80C replaced the existing Section 88 with more or less the same investment mix available in Section 88. The new section 80C has become effective w.e.f. 1st April, 2006. Even the section 80CCC on pension scheme contributions was merged with the above 80C. However, this new section has allowed a major change in the method of providing the tax benefit. Section 80C of the Income Tax Act allows certain investments and expenditure to be tax-exempt.

The Union Cabinet today approved the proposal under 1% interest subvention on housing loan scheme liberalising the limit of housing loan upto Rs. 15 lakh where cost of the house does not exceeding Rs. 25 lakh from the present limit of Rs. 10 lakh and Rs. 20 lakh respectively, and designating National Housing Bank (NHB) as the Nodal Agency (NA) for implementing the scheme both for Scheduled Commercial Banks and Housing Finance Companies.

The essential conditions for availing higher deduction of interest of Rs.1,50,000/- in respect of a self-occupied residential house are that the amount of capital must have been borrowed on or after 01.4.1999 and the acquisition or construction of residential house must have been completed within three years from the end of the financial year in which capital was borrowed. There is no stipulation regarding the date of commencement of construction.

Concerned over excessive flow of banking funds to the real estate sector, the Reserve Bank today said lenders will provide loans only up to 80 per cent of the cost of property. Following the RBI directive, a home buyer will necessarily have to arrang

The levy of a penalty by banks and housing finance companies for foreclosure of home loans does not amount to abuse of dominant position, the Competition Commission of India (CCI) ruled on Tuesday, quashing borrowers’ hopes that the practice could be