No More Subsidised Housing Loan Schemes For Government Employees

The Goa Government, in May, withdrawn the Housing Board Advance (HBA) scheme which would allow government employees to get subsidized home loan schemes. The ordinance, which was moved by the state government on May 15^th this year, received the Goa Governor Bhagat Singh Koshyari’s approval recently. 

What does this mean to the government servants? The Housing Board Advance (HBA) scheme would allow government employees to avail of a housing loan at a very low 2% rate of interest, while the remaining 7% was borne by the state government. This HBA was covered over a longer period of time, rather than the regular loans availed from other banks. 

This means that the government employees will no longer be able to avail loans under this HBA scheme from the Bank of India at subsidized interest rates. 

Many – in thousands – over the years bore the benefit of this Housing Board Advance scheme, and it is learned that many are currently still repaying their loans through this scheme. 

To those who finished repaying, it has been a lucky escape, while for those still repaying their housing loans, it means, they need to shift towards regular loan methods, which includes a higher rate of interest than this HBA which is currently stopped. 

For the government – reeling under extensive economic pressure – this move by the finance department is aimed to reduce the government’s expenditure. Also, this decision to stop the HBA has nothing to do with the covid-19 pandemic and was decided much earlier than this covid crisis. 

In May this year, Under Secretary (finance) Maya Pednekar had issued an order to all departments that government employees would no longer be eligible for cheap loans to build homes. 

Furthermore, the ordinance approved by the Governor prevents government employees from approaching the court or initiating other legal proceedings against the government or its department’s officials. 

Several government employees are currently not sure what happens next, however, the government through its ordinance has stated that while monthly installments will continue to be deducted from the salary of the employees, the government is not liable to compensate employees for financial hardships or damage caused because of cancellation of the HBA scheme. 

Also, employees are free to transfer their loan account to any other bank account. 

“Several government employees are aware of this cancellation of the HBA scheme, but many are confused about what happens next. In due course, the confusion should be cleared,” stated a government servant. 

Another government employee also said that there did exist some confusion however most have their clarifications sorted out, adding that currently those repaying won’t be badly hit, but those applying afresh will face problems as the same are not sanctioned anymore. 

According to a source, it is learned that the government has continued to deduct the monthly money for EMI’s from people’s salaries, however, it had failed to pay the EMI’s to the banks. 

Similar allegations were also made by the Goa Forward Party (GFP) leader Durgadas Kamat earlier this month. GFP stated that banks have been calling government employees as EMI’s have not been paid over the last three months, however, the same had been deducted by the government. 

“For the last three months, the EMIs are being deducted but the money is not being deposited in the bank,” Durgadas Kamat had said. 

According to the source, the cancellation of the government scheme will affect only those who have put in their paperwork this year to avail of this loan scheme at subsidized rates. To those already repaying, the government continues to deduct monthly EMI’s, and also the option for employees to change their loan account to other banks remains open. 

For many government servants – lower in the pay-scale – this comes as a major hit as many would depend on these schemes, however, now if they want to avail housing loans, it will mean that they will have to go through the normal process which includes high-interest rates.

Meanwhile, the Leader of Opposition Digambar Kamat terming this as a ‘rude shock’ had in June asked the state government to revoke this decision. 

The ordinance however does leave room open to the government if it wants to restart the scheme in the future, with or without new rules.