What is interest subvention?

I learnt what is interest subvention from a banking official only so I can help you in understanding its meaning. The Interest Subvention Scheme is a scheme where short-term agriculture loans of up to Rs 3 lakhs are available to farmers. These farmers can be engaged in agriculture or other allied activities like animal husbandry, dairy, fisheries or others. 

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What Does Interest Subvention Means?

To help you understand the interest subvention meaning more deeply, let me share some of its major aspects or features:

• The loan under the Interest Subvention Scheme is given with an interest rate of 7%

• An addition of 3% subvention is also given to the farmers who pay their debt on time

• The benefit of 1.5% interest subvention is available to banks that are extending their support for these loans

• Farmers with restructured loans get interest relief for a limited time based on the severity of the calamity.

• Farmers who repay loans on time get an additional 3% discount, reducing their interest rate to 4% per year.

• This benefit is available only through public sector banks (PSBs) and private sector banks (PVBs), but only for loans given by their rural and semi-urban branches.

These are the major details of the Interest Subvention Scheme. You can visit your nearest bank and ask the officials for more clarifications.

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Interest subvention scheme is a grant by the government which allows the repayment of EMI loan to start after the possession of the property has taken place by the buyer. In an interest subvention scheme the buyer, bank and developer form an agreement according to which the buyer has to pay a certain percentage of the total amount (usually between 5% to 20%) and rest is paid by bank in the form of a loan which is given to the distributor or developer at different construction stages. I hope interest subvention meaning is clear to you now.

The interest subvention scheme is introduced to provide a much needed boost to the real estate market by the government. Here I am enlisting a few features of the interest subvention for you:

• Interest subvention is different from the subsidy as there is nothing free in it.

• Interest subvention is just a financial aid to support home buyers. Buyers don’t have to pay all the money at once

• EMI in interest subvention scheme starts post possession of the property

• The scheme is highly beneficial for those who live in a rented accommodation and want to pay the EMI after getting the possession of property.

• Until the possession of the house is given to the buyer, developer pays the interest cost till possession or the time period as mentioned in the agreement

• In an interest subvention scheme, the developers and builders have an incentive to complete their project in time to get the complete amount due on the property.

I hope now you know interest subvention meaning.