RULES REGULATING GRANT OF INTEREST SUBSIDY

ON HOUSE BUILDING LOANS

1.0              PREAMBLE

1.1              A scheme to grant interest subsidy to the employees of the Company who take loans from approved Agencies for construction of residential houses, etc.

1.2              Subsidy will be granted subject to budgetary provision available from time to time.

1.3              The Company reserves to itself the right to withdraw or modify the scheme at any time without assigning any reason.

2.0              TITLE  

These Rules shall be called “ SIIL HOUSE BUILDING LOAN INTEREST SUBSIDY RULES”.

3.0              ELIGIBILITY 

Employees who have put in not less than 5 years continuous service in the Company in regular pay scale shall be eligible for grant of interest subsidy under this scheme.  Service rendered under Government/other Public Sector Undertakings without break shall be reckoned for the purpose of fulfillment of the minimum 5 years service in the Company.

Provided that interest subsidy shall also be granted in cases where

i)                    residential houses are constructed by the employees on the land/site owned by their spouses;

ii)                   loans obtained by the employees from approved financial institutions for the purpose of building/buying residential houses are presently repaid with interest.

Provided  further that where Husband and Wife are employed  in the company interest subsidy shall be granted to only one of them.

3.1       The following employees shall not, however, be eligible for interest subsidy;     

(a)                Employees on deputation from Government or other organisations.

(b)               Employees who are likely to retire within 3 years.

(c)                Employees who already own houses either in the name of self, wife or minor children anywhere in India.

(d)               Employees on contract or engaged on casual  basis.

(e)                Persons re-employed on superannuation from the Company’s services.

(f)                 Employees who or whose spouses have already availed of this benefit or any other  form of benefit for the purpose of construction/purchase of  residential houses/flats from any other source.

4.0              PURPOSE  

Interest subsidy can be availed of only once during the entire service of the employee for any of the following:

a)      Construction of a residential house/flat including acquisition of plot or land.

b)      Purchase of a ready-built house/flat for residential purpose; and

c)      For alteration/addition to the house owned by the employee or jointly with his wife/her husband.

5.0              ELIGIBLE SOURCES FOR  RAISING LOANS  

Loans raised from the following financing agencies or any other agency which advances for the purpose of construction of houses etc., as the Management may approve, will only qualify for the subsidy.

LIC, HUDCO, HDFC, STATE HOUSING CORPORATIONS/BOARDS, STATE APEX CO-OPERATIVE SOCIETIES AFFILIATED TO THEM AND NATIONALISED BANKS.

6.0              AMOUNT OF LOAN FOR THE PURPOSE OF SUBSIDY

The subsidy will be allowed on the loan actually raised but no exceeding 100 times of pay including personal pay plus dearness allowance on the date of application or Rs.1,25,000/- whichever is less for construction of a residential house/acquisition of a ready-built house/flat or Rs.45,000/- or 45 months’ pay including PP and DA, whichever is lower, in respect of additions/alterations to the existing house.

7.0              TERMS OF SUBSIDY

7.1              The rate of payment of subsidy will be the difference between the rate  of interest charged by the Central Government from time to time for grant of House Building Advance to the Central Government Employees and the interest rate charged by the LIC/HDFC other approved financial institutions, if the rate of interest charged by other approved financial institutions is less than or equal to the rate of interest charged by LIC/HDFC.  In case the rate of interest charged by other approved financial institutions is higher than the rate of interest charged by LIC/HDFC, the subsidy shall be limited to the difference between the rate of interest charged by the Central Government for grant of House Building Advance to the Central Government employees and the LIC/HDFC rate of interest.

7.2              The base rate of interest presently being charged by Government of India for grant of House Building Advance to the Central Government Employees from time to time.  The present rates vide Lr.No.1/17015/17/85/H.III, dated 25/11/85 of Ministry of Urban Development (Housing – III Section), Government of India, New Delhi) are as follows:

1)  If the sanctioned amount of HBA is upto Rs.25,000/-     ..  .. 7%

2)  If the sanctioned amount of HBA is upto Rs.50,000/-     ..  .. 7 1/2%

3)  If the sanctioned amount of HBA is upto Rs.75,000/-     ..  .. 8%

4)  If the sanctioned amount of HBA is upto Rs.1.00 lakh     ..  .. 8 1/2%

5)  If the sanctioned amount of HBA is upto Rs.1.25 lakh     ..  .. 9%

7.3              The house shall be in the name of the employee for claiming interest subsidy.  Further the benefit of interest subsidy will also be extended to those employees who availed/avail of a loan for construction/purchase/enlargement of a house/flat which is in the name of their spouse, subject to the condition that the spouse executes a declaration sworn before a Magistrate or Notary Public and lodges the same with the Company stating that the property will not be disposed of by the spouse without the prior written consent of the employees and the employee gives an irrevocable undertaking that consent for alienation under the declaration ill not be given without obtaining the approval in writing from the Company, in the prescribed form at Appendix-A and B.  The employees who had earlier secured loan for construction/purchase/enlargement of a house/flat which is in the name of their spouse, but continue to repay the loan amount and interest thereon, would also be eligible for interest subsidy  on the amount of loan outstanding as on 20.09.86 or thereafter as the case may be.

7.4              Subsidy shall be granted to the eligible employee as long as she/he continues to remain in service in the Company or the actual or notional period of  repayment of loan whichever is the earliest.

7.5              Claims for interest subsidy shall be entertained only after the completion/occupation of the house in the cases where employee builds the house.  In case of purchase of residential houses, interest subsidy shall be from the date the transaction of purchase is completed.  However, the subsidy reimbursed will be with reference to the dates when the loan amount is drawn.

7.6              In case of default in the repayment of principal or payment of interest thereby attracting penal interest, interest subsidy shall not be paid in respect of such penal interest.

7.7              SUBSIDY IS CALCULATE AS ILLUSTRATED HEREUNDER

 *  Interest rate applicable for self occupancy will be taken for calculating  subsidy.

7.8              Subsidy shall be granted both in respect of loans which envisage schedule repayment of principal and payment of interest (Ex . Equated Monthly Instalments (EMI) in mortgage scheme  pf :OC/HDFC) and loans where repayment of principal is adjusted only on maturity of insurance policies, the interest subsidy to be paid to the employees ill be determined as under:

The principal amount of the loan outstanding at the beginning and at the end of each year from the commencement of the loan shall be ascertained from the approved agency and the mean of such balances shall be the base for calculation of the subsidy . This will be made on an annual basis as per the illustrations at Appendix C & D.

While grant of subsidy in the former case will be on the basis of certificates of payment obtained from he financial institutions as referred to above, the grant of subsidy in the later case shall be regulated as illustrated in para 7.8.1. If the loan comprises both EMI and against policies, subsidy shall be calculated proportionately for the amounts under each scheme.

            7.8.1    ILLUSTRATLION

                        Loan obtained is Rs. 50,000/- against insurance policies whose maturity dates and amounts are as under:

                        Therefore, principal to be reckoned for payment of interest subsidy shall be as under:

            Note:  Commencement of the loan for the determination of repayments will be reckoned from the date of drawal of the full amount of loan.

7.9       Where loans are obtained under OYH  or other schemes wherein repayment of principal is envisaged beyond 15 years from the date of drawal of loan, interest subsidy shall be calculated on the basis of repayment of principal amount in equal instalments over a period of 15 years or date of retirement or superannuation whichever is earlier.

7.9.1        A loan of Rs.70,000 where repayment of capital is not envisaged within 15 years and the employee has 10 years service for retirement.

7.10          Cases which are not covered by paras 7.7 to 7.9, the interest subsidy to be paid to the employees will be determined as under:

a)                  The principal amount of loan will be notionally determined each year on the basis that the loan will be repaid by the employee in equal instalments within the period allowed by the Financing agency but not exceeding 20 years or the balance period of service with the company, whichever is less irrespective of actual repayment.

b)                  The subsidy will be calculated on annual basis in the mean of notional balance of loan at the beginning and at the end of the year.

7.11     Where the employee leaves the service of the Company before the normal date of superannuation, the interest subsidy paid already will be recalculated and adjusted.

8.0              PROCEDURE

8.1              The employee as soon as the loan is sanctioned by the Financing institution will submit an application for approval of payment of interest subsidy under the scheme in Appendix-E to Personnel Department.  The application should contain the following particulars:

i)                    The details regarding the house proposed to be constructed/purchased/enlarged;

ii)                   Cost of construction/purchase/improvement;

iii)                 Source from which loan has been obtained;

iv)                 Amount of loan obtained;

v)                  Terms of repayment of the loan – number of years, interest rate etc.,

vi)                 Copy of the communication issued by the Financing institution.

8.2              Claims of payment of interest subsidy will be submitted on quarterly basis duly supported by proof of payment of instalment/interest to  the Financial Institution to Personnel Department in Appendix F and the later after verification will forward the same to Finance Department for payment.  A continuous record of calculations and subsidy payments shall be maintained by the Accounts Department.

8.3              The Managing Director of Sponge Iron India Limited will the authority to interpret the provisions of this scheme whose interpretation shall be final.

APPENDIX-A 

            I, Shri/Smt._______________________________________________aged about____________________years, Son/Daughter of Shri__________________________ residing at _____________________do hereby solemnly affirm and declare that I was married to Shri/Smt.________________________aged about ________________.  I am in continuous wedlock with my wife/husband and are residing together at ___________________________.  I own a dwelling house/site clearly described in the Schedule hereunder:

            This declaration is made by me to enable my wife/husband Shri./Smt.______________________employed as______________at Sponge Iron India Limited ________________ to claim reimbursement of Interest Subsidy from Sponge Iron India Limited, in accordance with their Rules, in relation to the repayment of principal and interest  continued to be made by me to ___________from whom I have drawn a House Building loan of Rs.__________________.

            I also hereby declare that I am aware that the  Interest Subsidy reimbursement from Sponge Iron India Limited, is available to my wife/husband Shri./Smt___________________________ so long as I continue to be his/her legally wedded wife/husband and I continue to own the schedule property.

            In the event of my separation from my wife/husband or my effecting any kind of disposal of the schedule property, I shall not dispose of the said property without the prior written consent of my wife/husband Shri/Smt.___________________

            In the event of my failure to obtain written permission from wife/husband or in the event of my wife/husband claiming and drawing reimbursement of interest subsidy amount even after separation or disposal of property, SPONGE IRON INDIA LIMITED, has the liberty to take such legal action as may be necessary either against  me or my wife/husband or both for recovery of such amounts of loss, damages, costs and expenses and excess payment incurred by them and at their sole discretion.

SCHEDULE 

Place:                                                                                                               DEPONENT

Date:

                                                            “  Sworn to before me ”

APPENDIX-B

Manager (P&A),

Sponge Iron India Limited

SIIL Campus – 507 154

Khammam Dist.

                                                                        ( Through Proper Channel )

Dear Sir,

                        Sub:  Payment of Interest Subsidy.

                        Ref:  Your letter No._____________Dated___________.

                                                   *******      

            In accordance with the provisions of the above quoted letter, I enclosed a Declaration, in original, duly sworn to by my wife/husband Shri/Smt._____________before the Notary/Magistrate, to enable me to claim the interest subsidy amount.

            I hereby undertake that in view of what has been already stated in the declaration, I shall not give my consent for alienation of the said property to my wife/husband/Shri/Smt._____________without obtaining the approval in writing from Sponge Iron India Limited for such alienation.

            I further  authorize Sponge Iron India Limited, that any loss, damages, costs or expenses/excess payment sustained by Sponge Iron India Limited in this behalf may be recovered from my salary.  In the event of my separation from my wife/husband  or in the event of disposal of the scheduled property without the consent of Sponge Iron India Limited and/or claiming and drawing the reimbursement of  interest subsidy amount, even after such separation or disposal  of property, I understand that I am also liable for disciplinary action under the provisions of Standing Orders/SIIL Conduct, Discipline and Appeal Rules.

Yours faithfully,

Name:

Emp.No.

Designation:

Section/Dept.

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