Entertainment	Health	Home  Remedies	News Papers	General Knowledge	Our Youtube
Railway Employee	Railway Mutual  Transfer	Railway Question Bank	Railway Departmental Exam	Rail Employee  YouTube	Railway News
Railway Rules & Books	Railway Circulars & Order	Retirment & Pension	Railway Manuals & Codes	Railway Study Material	Railway Telephone Directory

 

Master Circular No. 50

House Building Advance.

 

(Revised Master Circular No. 50)

 

Master Circular No. 50 incorporating consolidated instructions in respect of House Building Advance was issued vide Board's letter No. F(E)Spl. 93/ ADV. 3/4 dated 25.5.1993 (RBE 71/93). Since then, several modifications/revisions of the rules governing House Building Advance have taken place. As such, in supersession of the existing Master Circular No. 50, a revised Master Circular incorporating all the instruction presently in vogue has been brought out and is sent herewith.

House Building Advance

Grant of House Building Advance is regulated in terms of rules and regulations laid down from time to time by the Ministry of Urban Development for Central Government employees in general. These instructions apply mutatis mutandis to Railway employees.

1.     Purposes:

The advance is admissible to an employee for only one of the following purposes:

                                                    i.            Construction of a new house on a plot owned by the official or by the official jointly with his/her spouse.

                                                  ii.            Purchasing a plot and constructing a house thereon.

                                                iii.            Purchasing a plot under co-operative Schemes and constructing a house/ flat thereon or acquiring a house through membership of Cooperative Group Housing Societies.

                                                iv.            Outright purchase of a new ready-built house/ flat from Housing Boards, Development Authorities and other statutory or semi-Government bodies and also from private parties i.e., registered builders, architects, house building societies, etc., but not from private individuals.

                                                  v.            Outright purchase from Joint Venture of authorities/ Boards etc., approved under HBA Rules and Registered Private Builders.

[Authority: Board's No. F(E)Spl. 99/ADV.3/8  dated 14.7.1999. (RBE 174/1999)]

                                                vi.            Purchasing/construction of house under the self-Financing Schemes of Delhi Bangalore, UP, Lucknow etc.

                                              vii.            Enlarging living accommodation in an existing house owned by the official or by the official jointly with his/her spouse, subject to cost ceilings laid down under the rules.

[Authority: Board's No. F(E)Spl. 78/ADV.3/1  dated 19.4.1978.]

                                            viii.            Repayment of loan or advance taken from a Govt. or Hudco or non-Government sources to build the house, even if the construction has commenced subject to certain conditions.

[Authority: Board's No. F(E)Spl. 89/ADV.3/9  dated 31.5.89 (RBE 130/1989)]

                                                ix.            Constructing residential portion only of the building on a plot, which is earmarked as a shop-cum-residential plot, in a residential colony, subject to the prescribed cost ceilings.

Note: 1. Advance is permissible for purchase of a house under the Self Financing Scheme of Indian Railway Welfare Organization.

[Authority: Board's No. FF(E)Spl. 91/ADV.3/6  dated 24.4.1991. (RBE 84/1991)]

2. In the case of a plot owned by the official jointly with his/her spouse, both husband and wife should be willing to mortgage the land/house in favour of the President of India, as a security for repayment of the advance. The application in such a case should be accompanied by a letter from the husband/wife, as the case may be, that if the HBA applied for is sanctioned, the husband/wife will mortgage his/her share of the land/property jointly with his/her spouse, as security for repayment of advance.

[Authority: Board's No. F(E)II 69/ADV. 3/1  dated 20.4.1970 and 30.5.1969]

3. HBA is not admissible for purchase of land only.

4. HBA is not admissible for acquiring a house on hire-purchase basis, but on conversion of hire-purchase flats/houses into outright purchase this becomes permissible, provided the purchase is made from State Housing Boards or similar Govt. controlled bodies.

[Authority: Board's No. F(E)Spl. 89/ADV.3/7  dated 8.5.89 (RBE 121/1989)]

5. HBA is not admissible for payment of earnest money or initial registration deposit, to be placed with Cooperative Societies/self financing schemes.

2.     Eligibility:

                                                    i.            All permanent Railway personnel.

                                                  ii.            All other officials with not less than 10 years service, provided they do not hold permanent appointment under a State Government and the sanctioning authority is satisfied about their continuation in service till the house is built and mortgaged.

                                                iii.            Members of All India Services deputed for service under the Central Govt./Company/ Association/Body of individuals, wholly or substantially owned or controlled by the Central Government or an International Organization, and autonomous body not controlled by Government or Private Body.

                                                iv.            Central Govt. servants on deputation to another Department or on Foreign Service.

                                                  v.            IES officers on deputation, and

                                                vi.            Other officials made eligible under HBA rules issued by the Ministry of Urban Development.

Note: 1. When both husband and wife are Central Govt. servants and both are eligible for grant of advance and its payment, the advance will be admissible to only one of them.

2. In the case of re-employed ex-servicemen, their past military services will be taken into account for purpose of computing the eligibility provided they have not drawn HBA during their military service and recovery of HBA with interest is ensured during the re-employed service.

[Authority: Board's No. F(E)Spl. 87/ADV.3/6  dated 31.3.1987. (RBE 361/1987)]

3. Officials under suspension - Central Government servants, who are placed under suspension, are also eligible for advance and the Head of Department can make payment to them, subject to the condition that collateral security in the shape of mortgage bond from two permanent Central Government servant is obtained. In the event of default or belated payment or insufficient money being available by foreclosure, etc., the shortage of recovery may be made up by collateral security.

[Authority: Board's No. F(E)Spl. 78/ADV.3/1  dated 19.4.1978.]

3.     Conditions for Grant of Advance:

                                                    i.            Advance is admissible for construction a house at the place of work or at a place where the applicant wants to settle down finally after retirement.

                                                  ii.            Only one advance is admissible under these rules during the entire service.

                                                iii.            The cost of the house to be built/purchased (excluding the cost of land) and if it is proposed to enlarge living accommodation in an existing house, the total cost of existing structure (excluding the cost of land) with proposed additions/ expansions should not exceed cost ceiling limits. In individual cases, the cost ceiling limits may be relaxed up to a maximum of 25%.

                                                iv.            The official should not have availed of any loan or advance from other Government sources for the purpose. However, if he undertakes to repay the outstanding loan/ advance with Interest in one Instalment, he may apply for advance under HBA rules.

                                                  v.            The total amount of withdrawal from SRPF/GPF and the House building advance under these rules should not exceed the cost ceiling limits laid down under the rules.

                                                vi.            The official or his/her spouse/minor child should not already own a house in the town/urban agglomeration where the house is proposed to be constructed or acquired with the advance from Government If, however, the official is a member of Hindu Undivided Family, which owns a house at the same place, he may be granted advance under these rules but the amount will be restricted to 60% of the normal entitlements.

[Authority: Board's No. F(E)Spl. 84/ADV.3/2  dated 12.4.1984
 and F(E)Spl. 84/ADV.3/2  dated 25.2.1985]

                                              vii.            The applicant must possess clear title of the land. The land may be owned by the official or his/her spouse jointly with the official. It should be free from encumbrances and attachments.

                                            viii.            If the advance is for purchase of ready built house/ flat from private parties i.e. registered private builder etc., the house/ flat should be new and unlived in. The applicant should get it valued at his own cost by registered valuers.

[Authority: Board's No. F(E)Spl. 78/ADV.3/10  dated 28.7.1978]

4.     Competent Authorities to Sanction HBA

5.     Amount of Advance:

The maximum amount of advance shall be:-

a.     50 months basic pay subject to a maximum of Rs. 7 .5 lakhs, or Cost of the house/ flat or the amount according to repaying capacity, whichever is the least for new construction/purchase of new house/flat.

b.     For enlargement of existing house the amount of HBA will be limited to 50 months basic pay subject to a maximum of Rs. 1.80 lakhs or the cost of the enlargement or the amount according to repaying capacity, whichever is the least.

c.      The amount of the advance shall be restricted to 80% of the true cost of land and construction of house or cost of enlarging living accommodation in the case of construction in rural areas. This can be relaxed and 100% can be sanctioned if the Head of Department certifies that the concerned rural area falls within the periphery of a town or city.

[Authority: Board's No. F(E)Spl. 97/ADV.3/6  dated 29.12.1997. (RBE 191/1997)]

6.     Cost Ceilings:

Cost ceiling limit for the purpose of HBA (excluding the cost of plot) will be 200 times the basic pay of the employee subject to a maximum of Rs. 18 lakhs. In cases where the 200 times of basic pay comes to be lower than Rs. 7.5 lakhs, cost ceiling up to Rs. 7.5 lakhs will be permissible.

In individual cases, the GM or HODs of Zonal Railways, if satisfied on the merits of the case, may relax the cost ceiling up to a maximum of 25% of the cost-ceiling limit mentioned above, under their powers delegated as per Board's letter No. FF(E)Spl. 91/ADV.3/5  dated 10.4.1991. (RBE 75/1991).

[Authority: Board's No. F(E)Spl. 97/ADV.3/6  dated 29.12.1997. (RBE 191/1997)]

Note: Pay of both husband and wife who are employed in Central/ State Govt., Public undertakings, Semi Govt. institutions or local bodies will be taken into consideration for the purpose of computation of cost ceiling limit.

7.     Repaying Capacity :

For the purpose of calculating the eligibility of advance, the repaying capacity will be calculated as below:

[Authority: Board's No. F(E)Spl. 97/ADV.3/6  dated 23.1.1998. (RBE 18/1998)
and No. F(E)Spl. 2000/ADV.3/7  dated 16.11.2000. (RBE 197/2000)]

While calculating repaying capacity, maximum number of instalments for recovery of the Principal amount may be taken as 180 and for recovery of the interest as 60 in the case of officials retiring after 20 years. The approximate interest amount should be calculated on the basis of the rates of interest prevailing on the date of sanction. The additional interest of 2¹/₂% above the prescribed rated of interest will not be taken into account for the purpose of computing the repaying capacity. Subsequent upward revision of DCRG limits will not entitle the Railway servant to any enhancement of HBA, in case the same has already been released by the time of revision of DCRG limits.

[Authority: Board's No. F(E)Spl. 87/ADV.3/12  dated 9.7.1987. (RBE 369/1987)]

8.     Interest:

0.     The advance carries simple interest from the date of payment of first instalment.

1.     Interest is calculated on the balance outstanding on the last day of each month.

2.     If the balance of principal amount is cleared on the 1st or during the middle of a particular month, the interest for that month will be NIL as the interest bearing balance will be NIL.

3.     If part of advance is adjustable from DCRG the adjustment should be deemed to have been made on the date of retirement. No interest is chargeable beyond that date.

4.     In case a Govt. servant dies while in service, no interest should be charged against the portion of advance adjusted against the DCRG, beyond the date of death of the official.

No interest will be charged beyond the date of superannuation or the date of death.

A higher rate of interest at 2¹/₂% above the prescribed rate will be shown in the sanction, with a stipulation that rebate of 2¹/₂% will be allowed in the interest for prompt repayment and observance of all other conditions attached to the sanction including those relating to the recovery of the amount.

[Authority: Board's No. F(E)Spl. 80/ADV.3/4  dated 8.7.1980]

9.     Rates of Interest:

For advances sanctioned from 1.6.1971 to 31.3.1974    -    6%

For advances sanctioned from 1.4.1974 to 5.8.1975       -    6¹/₂%

For advances sanctioned on or after 6.8.1975, following different rates will be charged.

From 25.11.1985 onwards, the basis for recovery of interest has been changed. It is leviable on the total amount of loan sanctioned, as given below:

W.e.f. 16.12.1997, existing rates of interest are as under:-

 [Authority: Board's No. F(E)Spl. 97/ADV.3/6  dated 29.12.1997. (RBE 191/1997)]

From 1st April, 2001, rates of interest for House Building Advances sanctioned to the Government servant for construction/ purchase of house/ flats will be as under, until further orders:-

In the process of recovery, the portion of loan carrying higher rate of interest will be treated as having been refunded first.

Sanction should stipulate the interest 2¹/₂% over and above the scheduled rates with the stipulation that if conditions attached to the sanction including those relating to the recovery of amount are fulfilled completely to the satisfaction of the competent authority, a rebate of interest to the extent of 2¹/₂% will be allowed.

Rate of interest when enhancement is sanctioned - Whenever enhanced HBA is sanctioned on the basis of revised orders, the rate of interest will be as per the revised orders for the entire amount of HBA, i.e., amount originally sanctioned plus the enhanced amount.

Concessional rate for promoting small family norms:

The rate of interest will be half per cent less for an employee who himself or his spouse undergoes sterilization and satisfies the conditions prescribed in Ministry of Railway's letter No. F(E)Spl.79/Adv. 3/15 dated 28.9. 1979 and F(E)Spl. 90/ADV.3/11  dated 10.8.1990. (RBE 135/1990). This is applicable only in case of officials who underwent sterilization on or after 1.9.1979 even after the release of first instalment of HBA. The rebate, however, will be admissible from the date of sterilization. Persons who have had twins after the birth of their first two children are also eligible for receiving the incentive, although they have 4 children. Rebate of ¹/₂% is also admissible if sterilization is had after one child. Rebate shall not be admissible if operation is undergone after drawl of final instalment of HBA.

10.Disbursement:

0.     Advance for purchase of ready built house will be paid in one lump sum as soon as the applicant executes an agreement in the prescribed form. The official should ensure that the house is purchased and mortgaged to the Government within 3 months of drawl of the advances.

1.     Advance for purchase/ construction of new flat may be paid either in one lump sum or in convenient instalments at the discretion of the Head of Department. The official should execute the agreement in prescribed form before the advance/ first instalment of advance is paid to him. The amount drawn by the official should be utilized for the purchase/ construction of the flat within one month.

[Authority: Board's No. F(E)Spl. 86/ADV.3/7  dated 4.8.1986
 and F(E)Spl. 86/ADV.3/2  dated 17.3.1986]

2.     Advance for construction/ enlargement of living accommodation, etc., shall be payable in two instalments of 50% each. The first instalment will be paid after the plot and proposed house/ existing house is mortgaged and the balance on the construction-reaching plinth level.

[Authority: Board's No. F(E)Spl. 91/ADV.3/3  dated 6.3.1991. (RBE 44/1991)]

3.     Advance for enlargement to be carried out on the upper storeys of the house will be disbursed in two instalments, first instalment on executing the mortgage deed and the second instalment on the construction reaching roof-level.

4.     In the case of advance for purchase of plot and construction of house, the advance will be disbursed as below :-

Single Storeyed House: - After the agreement in prescribed form is executed and production of surety bond, 40% of the advance or the actual cost will be disbursed for purchase of plot. The balance amount will be disbursed in two equal instalments, the first after the mortgage is executed and the second on the construction reaching plinth level.

Double Storeyeed House: - 30% of the advance for the cost of plot will be disbursed on executing the agreement. The balance amount will be disbursed in the two equal instalments, the first on executing the mortgage deed and the second on the construction reaching plinth level.

[Authority: Board's No. F(E)Spl. 98/ADV.3/1  dated 30.3.1998. (RBE 67/1998)]

11.In the case of purchase of ready built flats under the self-financing schemes of statutory bodies, semi Government bodies etc., including IRWO, the amount of HBA permissible will be sanctioned on receipt of an assurance from the authority that on completion of the flat, its possession will be handed over to the Govt. Servant concerned but payment thereof as and when made will be endorsed to the authority directly on the applicant's execution an agreement to repay the loan and interest thereon. He will also produce two sureties from permanent Govt. employees of comparable status who are not likely to retire in the near future. The payment will be released to the authority in instalments, on prorata basis, calculated with reference to total cost of construction (excluding the earnest money or the initial registration deposit) and the amount of HBA sanctioned, as and when demanded by them, consistent with the progress of construction. The demand notice from the authority for release of each instalment of HBA should be accompanied by a certificate from the Engineer of appropriate status as may be determined by that organization, certifying completion of that much percentage of total work for which the demand has been made. On completion of the flat, the Govt. servant concerned will mortgage the flat to the President of India. The cost of the flat, over and above the ceiling limit of advance, will be borne by the Govt. servant concerned. If the Govt. servant wants to withdraw from the scheme or is unable to meet the balance amount representing the difference between the HBA sanctioned by the Government and the actual cost of the house, the Authority will refund the amount of house building advance forthwith to the Government. With a view to safeguarding the interests of the Government the authority will enter into a tripartite agreement in the prescribed form. The authority will maintain a separate account for each Govt. servant and adjust the payment of advance against the cost of construction of the payment of advance against the cost of construction of the particular category of flat applied for by the Govt. servant concerned.

12.Different stages at which the instalments of advance are to be disbursed.

                       &nbs