House Building Advance

1. Eligibility. -

1. All permanent government employees.
2. All other employees with at least 5 years of continuous service, provided they do not hold permanent appointment under a State Government and the sanctioning authority is satisfied about their likely retention in service till the house is built and mortgaged.
3. Members of All India Services deputed for service under the Central Government/Company/ Association/Body of individuals whether incorporated or not, which is wholly or substantially owned or controlled by the Central Government or an International Organization, and autonomous body not controlled by Government or Private Body.
4. Employees of Union Territories and North East Frontier Agency.
5. Staff/ Artistes of the All India Radio who fulfil the condition prescribed at (ii) above and have been appointed in long term contracts extending to the age as per extant rules.
6. Central government employees governed by The Payment of Wages Act, 1936.
7. Central government employees on deputation to another Department or on Foreign Service. Such cases to be processed by the Head of the Office of the Parent Department.
8. Extant rules for eligibility conditions of Ex-servicemen and of central government employees under suspension remains unchanged.

Note: In cases where both the spouses are central government employees and are both eligible for grant of House Building Advance, the advance will be admissible to both of them jointly/separately. -Rule 3.

2. Purposes. -

House Building Advance (HBA) is admissible to an employee for only one of the following purposes:-

1. Constructing a new house on the plot owned by the employee or spouse, either jointly or individually.
2. Purchasing a plot and constructing a house thereon.
3. Purchasing a plot under co-operative Schemes and constructing a house/ flat thereon or acquiring a house through membership of Cooperative Group Housing Societies.
4. Purchase/construction of house under the self-financing schemes of Delhi, Bangalore, UP, Lucknow etc.
5. Outright purchase of a new ready-built house/ flat from Housing Boards, Development Authorities and other statutory or semi-Government bodies and from registered builders i.e., registered private builders, architects, house building societies, etc., but not from private individuals.
6. Expansion of living accommodation of an existing house owned by the employee or jointly with spouse. The total cost of the existing structure (excluding cost of land) and the proposed additions should not exceed the prescribed cost ceiling under these rules.
7. Repayment of loan or advance taken from a Government or HUDCO or private sources even if the construction has commenced, subject to certain conditions.
8. Existing employees who have already taken Home Loans from Banks and other financial institutions are allowed to migrate to this scheme, subject to fulfillment of extant conditions.
9. Before grant of HBA, the Head of Department-
10. should satisfy himself that the home loans were taken by the Government employee entirely for the purpose of construction/purchase of new house/flat.
11. should ensure that the HBA sanctioned is limited to the amount of loan still due to be repaid by the Government employee.
12. HBA can be availed for repayment of bank loan taken for the purpose of construction/ purchase of new house/flat.
13. HBA can be granted on the date the Government servant obtained loans from Banks and other financial institutions, irrespective of whether they applied for HBA before raising the loan.
14. HBA for repayment of loans can be granted in one lumpsum and the Government employee shall produce the Utilization Certificate within one month from release of HBA.
15. Employee to satisfy other provisions of HBA rules. — GIO (15), Rule 2.
16. Constructing only residential portion of the building on a plot earmarked for a shop-cum-residential plot, in a residential colony, subject to prescribed cost ceiling. — Rule 2.

4. Cost Ceiling. -

5. Amount of Advance. -

1. Only one advance shall be sanctioned to the Government servant during his/her entire service.
2. The maximum amount of advance shall be:
3. 34 months’ basic pay subject to a maximum of Rs. 25 lakhs only (Rupees Twenty Five Lakhs), or cost of the house/flat, or the amount according to repaying capacity, whivever is the lease for construction/purchase of new house/flat.
4. For expansion of existing house, the amount of HBA will be limited to 34 months’ basic pay subject to maximum of Rs. 10 lakhs only (Rupees Ten Lakhs), or the cost of the expansion, or the amount according to repaying capacity whichever is the least.
5. The amount of the advance shall be restricted to 80% of true cost of the land and construction of house or cost of expansion of living accomodation in the case of construction in rural areas. This can be relaxed and 100% can be sanctioned if the Head of the Department certifies that the concerned rural area falls within the periphery of town or city.
6. Family Pension at normal rates drawn by a Government Servant will be clubbed with basic pay for computing amount of advance as well as cost ceiling.
7. The amount of advance sanctioned can be reduced at the request of the Government Servants to avail of the reduced rate of interest, if the entire advance has not been drawn. — GIDs, Rule 5.

6. Enhancement of ceiling of HBA sanctioned on or after 1–1–2016 but before 9–11–2017. -

An enhancement of House Building Advance, if applied for, would be granted for an amount equivalent to the difference between the previously sanctioned amount and the new eligible amount determined on the basis of basic pay as per Seventh CPC, subject to complying following conditions.-

1. The employee should not have drawn the entire amount of HBA sanctioned under earlier orders and/or where construction is not completed/full cost towards acquisition of house/flat is yet to be paid.
2. There will be no deviation from the approved plan of construction on the basis of which the original sanction of House Building Advance was accorded. The revised cost of the original plan can, however, be considered for determining the additional amount, subject to the prescribed maximum limits.
3. Supplementary Mortgage Deed, Personal Bond and Sureties will be drawn and executed at the expense of the loanee.
4. The actual entitlement will be restricted to the repaying capacity computed on the basis of the formula at 4. Cost Ceiling above. It should be ensured that the entire amount of advance with interest is recovered before retirement of the Government servant.
5. The new rate of interest of 8.5% 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 repaid on old rates will not attract the fresh interest charges.
6. However, the existing limit of maximum admissible amount of Rs. 25 lakhs for the purpose of construction/purchase of new home/flat and Rs. 10 lakhs for expansion of existing house/flat would remain unchanged. In other words, the sum total of previously sanctioned House Building Allowance and the enhancement granted under these orders cannot exceed the aforesaid limits. In any case, not more than one enhancement is admissible to a Government employee.
7. The applications for enhanced House Building Advance should be submitted within six months from 29–6–2018. — GIO (6), Rule 5.

7. Repaying Capacity.-

The repaying capacity of the official will be computed on the following basis:-

Sl. No.

Length of remaining service

Repaying Capacity

a.

In cases of employee retiring after 20 years.

40% of Basic Pay.

b.

In cases of employee retiring after 10 years but not later than 20 years

Up to 40% of Basic Pay. 65% of DCR Gratuity may also be adjusted.

c.

In cases of employee retiring within 10 years.

Up to 50% of Basic Pay. DCR Gratuity up to 75% can be adjusted.

8. Disbursement of advance and time-limits for utilization.-

1. For purchase of ready built house. — In one lumpsum as soon as the applicant executes an agreement in the prescribed form. The employee should ensure that the house is purchased and mortgaged to the Government within 3 months of the drawal of the advances.- Rule 8 (i).
2. For purchase/construction of new flat. — Either in one lump sum or in convenient installments at the discretion of the Head of Department. The employee should execute the agreement in the prescribed form before the advance/first installment of advance is paid to him/her. The amount drawn by the employee should be utilized for the purchase/ construction of the flat within one month.- Rule 8 (ii).
3. For construction/expansion of living accommodation, etc. — Payable in two installments of 50% each. The first installment will be paid after the plot and proposed houses / existing houses are mortgaged and the balance on the Construction-reaching plinth level.- Rule 8 (iii).
4. For expansion to be carried our on the upper storey of the house. — Disbursed in two installments, the first installment on executing the mortgage deed and the second installment on the construction reaching roof level. In the case of advance for purchase of plot and construction of the house, the advance will be disbursed as below:- Rule 8 (iv).
5. For purchase of plot and construction of house. -
6. Single Storeyed House: After agreement in prescribed form is executed on the production of the surety bond, 40% of the advance or actual cost will be disbursed for the purchase of the plot. The balance amount will be disbursed in two equal installments, first after the mortgage is executed and second, on the construction reaches the plinth level.
7. Double Storeyed House: 30% of advance for the cost of the plot will be disbursed on executing the agreement. The balance amount will be disbursed in two equal installments, the first on executing the mortgage deed and the second On construction reaching plinth level. — Rule 8 (v).

9. Interest. -

1. The advances carry simple interest from the date of payment of the first instalment and is calculated on the balance outstanding on the last day of each month.
2. No interest is chargeable beyond the date of retirement/death of the Government servant. — GID (1), Rule 8.
3. Rates of interest. — The Interest on House Building Advance from 1–4–2022 to 31–3–2023 shall be 7.1%. This shall be reviewed every three years to be notified in consultation with Ministry of Finance.- OM, dated 1–4–2022.
4. Interest rebate to HBA beneficiaries for promoting small family norms will cease to exist with effect from 1–7–2017. — OM, dated 31–1–2018.

10. Mortgage. -

In case HBA is availed by both husband/ wife jointly,

1. HBA Mortgage paper, insurance paper and other papers regarding property shall be submitted to one of the loan sanctioning authorities of their choice.
2. A No Objection Certificate may be obtained from the 2nd loan sanctioning authority.
3. The property mortgaged on behalf of the President of India, shall be reconvened on the prescribed form to the central government employee concerned (or their successors in interest, as the case may be), after the advance together with interest thereon, has been repaid to Government in full and after obtaining No Demand Certificate in respect of HBA loan sanctioned by the 2nd loan sanctioning authority.- Rule 9.

11. Insurance.-

Immediately on completion of construction/purchase of house/flat, the employee shall insure the house with the recognized institutions as approved by Insurance Regulatory and Development Authority (IRDA), for not less than the amount of advance and shall keep it so insured against damage by fire, flood and lightning till the advance together with interest thereon is repaid in full and deposit the policy documents with the Head of the Department (HoD). Renewal of insurance will be done every year and premium receipts produced for the inspection of the HoD regularly.

Penal interest of 2% over and above the existing rate of interest will be recovered from the employee for those periods which are not covered by the insurance of the house. — Rule 10.

The employees may get their house/flat insured from any of the four Nationalized General Insurance Companies of their choice, irrespective of its location in India. — GIO (8), Rule 10.

Separate insurance of flats/houses acquired through membership of Co-operative Group Housing Societies not necessary. — GIO (5), Rule 10.

12. Second Mortgage.-

Creation of Second charge.- If an employee wants to avail of a further loan (in addition to the HBA) from any recognized financial institution, he may declare the same and obtain NOC. NOC for second charge will be given along with sanction order of HBA:-

1. Loan to be obtained should be from recognized financial institutions like Banks, Government Financial Corporations, Co-operative Housing Finance Institutions, Public Companies formed and registered in India with specific purpose of financing housing like Housing Development Finance Corporation Limited.
2. The total HBA taken plus the amount of loan now raised should not exceed the prescribed cost ceiling.
3. Second charge can be created in respect of loan for meeting the balance cost of the house/flat.
4. Second charge can be created also for enlargement of living accommodation in the house constructed/acquired with HBA, if two years have elapsed after completion of the house constructed with HBA.
5. Prior permission of the Head of Department should be obtained, — Rule 9.

13. Assignment of employee’s interest in Group Insurance Scheme, 1980.- An employee who is a member of the Central Government Employees’ Group Insurance Scheme, 1980, can assign his interest in the insurance cover and accumulation in the Savings Fund as a security to the financial institution for obtaining additional loan from them for acquiring/building a flat/house subject to conditions 1 to 4 above.

The communication of acceptance of the assignment should be entered in the Service Record in red ink. — Rule 11.

14. Repayment of advance.-

The entire amount of advance together with interest is repayable in 20 years, 180 monthly instalments for principal and 60 instalments for interest. — Rule 7.

Existing pattern of recovery:

1. In the case of construction of new house or enlarging living accommodation, recovery will commence from the pay for the month following the completion of the house or the pay for the 18th month after the date of payment of the first instalment, whichever is earlier.
2. In the case of advances taken partly for purchase of land and partly for construction, recovery will commence from the pay for the month following the completion of the house or the pay for the 24th month after the date on which the instalment for purchase of land was drawn by the official, whichever is earlier.
3. In the case of ready-built house or flat, recovery will commence from the pay for the month following that in which the advance is taken.

Adjustment of a portion from retirement/death gratuity.- In the case of employees retiring within 20 years, a portion of the advance and/or interest may be left to be adjusted from the retirement/death gratuity if a suitable clause to that effect is inserted in the mortgage deed.

Failure to repay.- If the officials fail to repay the balance of the advance on or before the date of retirement, Government may enforce recovery from retirement/death gratuity or by sale of the house or in any other manner.

Manner of recovery:- Recovery will be effected through monthly pay/leave salary or subsistence allowance bills. Recovery cannot be postponed without the prior concurrence of Government.

15. Reconveyance of properties.-

1. The property mortgaged to Government should be reconveyed to the Government servant in the prescribed form after the advance together with interest has been repaid to Government in full.
2. Reconveyance Deed should be executed by the Head of Department on behalf of the President.
3. The Deed should be got registered.
4. The expenses in connection with the execution/registration should be borne by the loanee unless the execution/registration of the deed by the Central Government is exempt.

Originally published at https://cgshandbook.blogspot.com on April 3, 2022.