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MASTER CIRCULAR

Master Circular No. 50

House Building Advance.

House Buliding Advance

Interest Bearing Advances.

(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

1. Non-Gazetted Staff - HODs/DRMs
[Authority: Board's No. F(E)Spl.74/ADV.3/10 dated 8.2.1977]
2. Gazetted Officers (except HODs) - Addl. GM.
3. HODs, including SDGM & Addl. GMs - GMs
[Authority: Board's No. F(E)Spl. 74/ADV.3/10 dated 2.9.1980]
4. For sanction of HBA to the GMs/officers of equivalent rank/DG, ROSO, approval of
Board should be obtained and sanction letter should be issued under the signature
of Secretary, Railway Board.
[Authority: Board's No. F(E)Spl. 82/ADV.3/1 dated 24.3.1982.]
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:

Officials retiring after 20 years 40% of (basic pay + stagnation

increment+NPA)
Officials retiring after 10 years Up to 40% of (basic pay + stagnation
but not later then 20 years : Increment + NPA). 65% of DCRG may be
adjusted.
Officials retiring within 10 years Up to 50% of (basic pay + stagnation
Increment + NPA) DCRG up to 75% can be
adjusted.

[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:
1. The advance carries simple interest from the date of payment of first
instalment.
2. Interest is calculated on the balance outstanding on the last day of each month.
3. 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.
4. 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.
5. 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.

(Rs.) 6.8.1975 to 1.6.1981 to 1.4.1984 to

31.5.1981 31.3.1984 24.11.1985
For the first 25,000 61/2% 7% 7%

For the next 25,000 8% 81/2% 81/2%

For the next 25,000 10% 101/2% 101/2%

For the next 50,000 12%

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:

If the Amount of 25.11.1985 to 24.6.1987 to 26.7.1990 to

loan sanctioned is 23.6.1987 25.7.1990 onwards
upto
Rs. 25,000 7% 7% 71/2%

Rs. 50,000 71/2% 7% 71/2%

Rs. 75,000 8% 8% 9%
Rs. 1,00,000 81/2% 8% 9%

Rs. 1,25,000 9% 9% 10%

Rs. 1,50,000 9% 10%
Rs. 2,00,000 10% 11%
Rs. 2,25,000 101/2% 111/2%

Rs. 2,50,000 11% 12%

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

If the sanctioned HBA is up to Rate of interest

(a) Rs. 50,000 7.5%
(b) Rs. 1.5 lakhs 9%
(c) Rs. 5.00 lakhs 11%
(d) Rs. 7.5 lakhs 12%

[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:-

S. Amount of advance of Existing Rate of Interest Revised rate of interest

No. sanctioned to a Govt. on HBA (per annum) on HBA (per annum)
servant
1. Upto Rs. 50,000 7.5% 6.5%
 2. Upto Rs. 1,50,000 9% 8%
3. Upto Rs. 5,00,000 11% 10%
4. Upto Rs. 7,50,000 12% 11%

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/ % is also admissible if sterilization is had after one child. Rebate shall not be
2
admissible if operation is undergone after drawl of final instalment of HBA.

10. Disbursement:
1. 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.
2. 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]

3. 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)]

4. 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.
5. 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)]

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.

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

I. Purchasing of plot and construction of single-storeyed/ double-storeyed house.

Total: 3 Instalments - [Link]/[Link]

1st On executing the agreement in the prescribed form and production of

surety bond.
2nd On executing the mortgage deed after purchase of plot.
3rd On the construction reaching the plinth level.

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

II. Construction of single-storeyed/double storeyd house or enlarging of living

accommodation in an existing house.

Total: 2 instalments.

1st On executing the mortgage deed.

2nd On the construction reaching the plinth level.
III. Enlarging living accommodation in the upper storeys of the house.

Total: 2 instalments.

1st On executing the mortgage deed.

2nd On the construction reaching the roof level.
IV. Purchasing a ready-built house.

One instalment.

On executing the agreement in the prescribed form and furnishing the surety in
prescribed form.
 V. Purchasing/Construction of a new flat.

The amount may be disbursed in one or more convenient instalments at the

discretion of the Head of Department.

11. Creation of Second Charge:

To meet the balance cost of house/flat, Govt. servants may create a second charge
on the property subject to the following condition.

[Authority: Board's No. F(E)Spl. 82/ADV.3/6 dated 1.1.1983

and F(E)Spl. 82/ADV.3/6 dated 8.6.1983.]

1. Prior permission of the Head of the Department should be obtained for the
second charge.
2. The second charge can be created only in respect of loans to be granted for
meeting the balance cost of house/flat.
3. The loan to be granted should be by recognized financial institutions such as:
a. Banking institutions, including Coop. Banks.
b. Financial corporations set up by the State Governments, which provide
loans for house construction.
c. Apex cooperative housing finance institutions such as Delhi Coop. Housing
Finance Society.
d. Public companies formed and registered in India with the main object of
carrying on the business of providing long-term finance for constructing or
purchase of houses in India for residential purposes like the Housing
Development Finance Corporation Ltd.
4. The total amount of the HBA granted by the Government and the loan raised
from these institutions taken together should not exceed the prescribed cost
ceiling limit applicable to the Govt. servant concerned.
12. Repayment of Advance:
1. The entire amount of advance with interest thereon shall be repaid in full by
monthly instalments within a period not exceeding 20 years i.e., the maximum
number of instalments are 240.
2. Out of the above 240 instalments, the principal amount will be first recovered in
not more than 180 instalments. After the principal is fully recovered, the
interest due shall be calculated and recovered in not more than 60 monthly
instalments.
3. The amount to be recovered shall be fixed in whole rupees. If there is any
fraction of a rupee it shall be recovered in the last instalment.
4. The recovery should commence as follows :-
i. In the case of advance for purchase of land and construction of house,
from the pay of the month following the completion of the house or from
the pay of 24th month after the date on which the advance for purchase of
plot was sanctioned, whichever is earlier.

[Authority: Board's No. F(E)Spl. 75/ADV.3/8 dated 16.2.1976]

ii. In the case of advance for construction of house, from the pay of the
month following the completion of the house or from the pay of 18th
month after the date of disbursement of first instalment of the advance,
whichever is earlier.
iii. In the case of purchase of ready built house/ flat, from the pay of the
month following that in which the advance is drawn.
5. The advance may be repaid in a shorter period also if the official so desires.
6. The entire advance shall be recovered in full, with interest thereon before the
retirement of the official.
7. In the case of officials due to retire within 20 years of the grant of advance, the
officials may be permitted to repay a part of the advance in convenient monthly
instalments till date of retirement and pay the balance from out of his DCRG. In
such cases, specific provision to this effect should be incorporated in the
 Agreement/ Mortgage Deed. The amount of instalment worked out should not
be less than that worked out on the basis of repaying within 20 years.
8. Recovery shall be effected through the monthly pay bills/leave salary bills/
subsistence allowance bills, as the case may be.
9. Recovery shall not be held up or postponed without the prior concurrence of the
Government.
10. If the subsistence allowance is reduced due to prolonged suspension, the
recovery may be suitably reduced, if necessary, by the Head of Department.
11. If a Govt. servant ceases to be in service for any reason other than normal
retirement/ superannuation or if he dies before repayment of the advance in
full, the entire outstanding amount will become payable forthwith. If, however,
the house has not been completed and mortgaged by that time, the
Government may, in deserving cases, permit repayment of the out-standing
amount with interest in suitable instalments.
12. Failure to repay the advance for any reason whatsoever either by the Govt.
servant or his successors, as the case may be, will entitle the Government to
enforce the mortgage and take action to recover the outstanding amount.
13. Reconveyance
1. After the advance together with interest thereon is repaid in full, the property
mortgaged to the Govt. will be reconveyed to the official in the prescribed
format.
2. The Head of Department who generally accepts the mortgage deed on behalf of
the President shall execute the reconveyance deed.
3. Registration of reconveyance deed is compulsory.
4. The expenses in connection with the execution and registration to the
reconveyance deed shall be borne by the official concerned.
5. After the reconveyance deed has been executed and registered, it shall be
made over to the official concerned along with the mortgage deed, sale deed
and other documents deposited by the official. A receipt, therefore, shall be
taken from the official and kept on record along with a copy of reconveyance
deed.
6. In case a Govt. servant dies intestate and the advance is recovered from
gratuity or otherwise, reconveyance may be made to the legal heir. If there are
more than one legal heir, the reconveyance can be done in favour of one of
them, after obtaining 'no objection' affidavit from others.
14. Duties of Head of Department :
1. He should scrutinize the application and satisfy himself about the facts stated
therein.
2. He should ensure from the title deeds that the applicant possesses a clear title
to the property in question.
3. He should see and satisfy himself that the property is free from encumbrances.
4. He should see that the cost of the proposed house/ flat does not exceed the
prescribed ceiling limit.
5. The amount of advance should not exceed -
a. 50 times the (Pay + Stagnation Increment + NPA) of the applicant; or
b. Rs. 7,50,000; or
c. Estimated cost of the construction; or
d. Maximum amount worked out on the basis of repaying capacity,
whichever is the least.

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

191/1997)]

6. In the case of purchase of land and construction of house, the HOD should get -
(1) the agreement in the prescribed form executed by the official, and (2)
surety bond from a permanent Central Govt. servant of status not lower than
that of the applicant before the disbursement of first instalment. The mortgage
deed should be got executed and registered before the second instalment is
paid.
 7. In the case of advance for construction of houses, mortgage deed in the
prescribed form should be got executed and registered before payment of the
first instalment. Further, the proposed construction is in accordance with
approved plan & specifications.
8. In the case of advance for purchase of ready built house/ flat, agreement and
surety bond should be got executed before payment of the advance and
mortgage deed shall be got executed and registered within 3 months of
disbursement of the advance. For executing mortgage deed in the case of
purchase of house/flat on the leasehold land, the absolute right of which is not
vested in the purchaser, 'Form No.4 B' should be brought into use.

[Authority: Board's No. F(E)III/71 ADV.3/3 (ii) dated 10.11.1971

and F(E)Spl. 2000/ADV 3/4 dated 11.9.2000 (RBE 162/2000)]

9. In the case of advance to acquire house through membership of Coop Group

Housing Societies, personal bond, an agreement to mortgage the house/flat
followed by deposit of title deeds (as and when available) and a promissory
note in respect of the amount of principal; plus interest at specified rates should
be obtained before payment of the HBA.
10. In all cases, sale deeds and other original documents should be obtained along
with the mortgage deed and kept in deposit with the HOD.
11. In addition to the agreement/mortgage deed, surety from an approved
permanent Govt. servant should be obtained in the followed cases:
a. All applicants who are not permanent Central Govt. servants
b. All applicants who are due to retire within a period of 18 months from the
date of application.
c. All applicants who are permanent Central Govt. servants who require the
advances for the purchase of a ready built house.
12. In the case of advance for constructing/ purchase of ready built house/ flat, the
HOD should obtain adequate collateral security wherever the land on which the
flats stand is not mortgaged in favour of the President of India.
13. In all cases, HOD should satisfy himself that the Govt. servant establishes his
marketable title to the property in accordance with the procedure prescribed by
the Government before execution of the mortgage deed.

If the terms of sale do not vest title to the land in favour of the Govt. servant till
house is erected on the land, it should be ensured before execution of the
agreement that the Govt. servant will be in a position to acquire a clear and
marketable title free from all encumbrances on erection of the house.

14. He should see that the mortgage deed and the reconveyance deed on release
of the mortgage are duly registered within 4 months from the date of their
execution. Registration is not necessary in the case of surety bonds and
agreements under HBA rules.
15. He should see that the house is insured as per the rules immediately on
purchase/ completion and that the premium receipts are regularly obtained for
inspection.
16. He should ensure that the house is maintained in good repair and the necessary
municipal rates and taxes are paid regularly and the requisite certificates
furnished annually until the advance has been repaid in full.
17. He should ensure that the monthly recovery of instalments towards repayment
of the advance commences from the due date and is made regularly from the
monthly pay/leave salary/subsistence allowance bills of the official.
18. In the case of Government servants likely to retire within 18 months of the date
of their application for advance, he should ensure that the amount of their
gratuity would be adequate to cover the balance outstanding on the date of
retirement.
19. He should ensure that the amount, if any, drawn by the official in excess of the
expenditure incurred, is returned by the official forthwith together with interest,
if any, due.
20. He should ensure that the property mortgaged by the Government servant is
released or reconveyed immediately on the repayment of the advance and
 interest in full, and the mortgage deed duly cancelled returned together with
the original documents of title of the land, etc., to the Government servant.
21. In case of HBA required for acquiring/constructing house in rural areas, the
conditions laid down in M/o Urban Development and Poverty Alleviation's O.M.
No. 1/17015/8/94-H-III, dated 6. 10. 1994 must be satisfied.

[Authority: Board's No. F(E)Spl. 2000/ADV 3/3 dated 11.9.2000 (RBE 161/2000)]

15. Insurance:

Immediately on completion of construction/ purchase of house/ flat, the Govt.

servant shall insure the house, at his cost, with Life Insurance Corporation of India
for not less than the amount of advance and shall keep it so insured against damage
by fire, floods, and lightning till the advance together with interest thereon is repaid
in full and deposit the policy with the HOD. Renewal of insurance will be done every
year and premium receipts produced for inspection of HOD reguarly.

[Authority: Board's No. FF(E)Spl. 79/ADV.3/11 dated 31.7.1979]

16. Condonation of Non-Insurance :

Heads of Departments/ Authorities empowered to grant HBA are competent to

condone the period of non-insurance up to two years and only cases of non-
insurance in excess of that period are required to be referred to Ministry of Urban
Development. It has to be ensured that the irregularity is not deliberate on the part
of the Govt. servant but due to circumstances beyond his control.

[Authority: Board's No. F(E)Spl. 94/ADV.3/7 dated 13.10.1995. (RBE 115/1995)]

17. Residual Powers:

1. All cases involving relaxation of rules/orders and cases in which doubts persist
are required to be referred to Ministry of Urban Development & Poverty
Alleviation, through administrative Ministry. Ministry of Urban Development &
Poverty Alleviation is the nodal Ministry for grant of HBA and residual powers
vest with them.
2. While referring to this Master Circular, the original circulars mentioned herein
and the provisions of the Code/ Establishment Manual should be read for a
proper appreciation. This circular is only a consolidation of existing
instructions/ and should not be treated as a substitute of the original circulars.
In case of doubt, the original circulars should be relied upon as authority.
3. If any circular having a bearing on the subject which has not been superseded,
has been lost sight of in the preparation of this circular, the said circular which
has been missed through oversight should not be ignored, but should be treated
as valid and operative.
4. The letters and other references on the basis of which this circular has been
prepared are indicated in the annexure.

ANNEXURE

1. No. F(E)II 69/ADV. 3/1 dated 20.4.1970.

2. No. F(E)II 69/ADV. 3/1 dated 30.5.1969.
3. No. F(E)Spl. 75/ADV.3/8 dated 16.2.1976.
4. No. F(E)Spl.74/ADV.3/10 dated 8.2.1977.
5. No. F(E)Spl. 78/ADV.3/1 dated 19.4.1978.
6. No. F(E)Spl. 78/ADV.3/10 dated 28.7.1978.
7. No. F(E)Spl. 79/ADV.3/11 dated 31.7.1979.
8. No. F(E)Spl. 80/ADV.3/4 dated 8.7.1980.
9. No. F(E)Spl. 74/ADV.3/10 dated 2.9.1980.
10. No. F(E)Spl. 82/ADV.3/1 dated 24.3.1982.
11. No. F(E)Spl. 82/ADV.3/6 dated 1.1.1983.
12. No. F(E)Spl. 82/ADV.3/6 dated 8.6.1983.
 13. No. F(E)Spl. 84/ADV.3/2 dated 12.4.1984.
14. No. F(E)Spl. 83/ADV.3/15 dated 23.2.1985.
15. No. F(E)Spl. 84/ADV.3/2 dated 25.2.1985.
16. No. F(E)Spl. 85/ADV.3/15 dated 23.9.1985.
17. No. F(E)Spl. 86/ADV.3/2 dated 17.3.1986.
18. No. F(E)Spl. 86/ADV.3/7 dated 4.8.1986.
19. No. F(E)Spl. 87/ADV.3/6 dated 31.3.1987. (RBE 361/1987)
20. No. F(E)Spl. 87/ADV.3/12 dated 9.7.1987. (RBE 369/1987)
21. No. F(E)Spl. 87/ADV.3/7 dated 8.5.1989.
22. No. F(E)Spl. 89/ADV.3/7 dated 8.5.89 (RBE 121/1989)
23. No. F(E)Spl. 89/ADV.3/9 dated 31.5.89 (RBE 130/1989)
24. No. F(E)Spl. 90/ADV.3/11 dated 10.8.1990. (RBE 135/1990)
25. No. F(E)Spl. 90/ADV.3/12 dated 16.8.1990. (RBE 139/1990)
26. No. F(E)Spl. 91/ADV.3/3 dated 6.3.1991. (RBE 44/1991)
27. No. F(E)Spl. 91/ADV.3/5 dated 10.4.1991. (RBE 75/1991)
28. No. F(E)Spl. 91/ADV.3/7 dated 23.4.1991. (RBE 83/1991)
29. No. F(E)Spl. 91/ADV.3/6 dated 24.4.1991. (RBE 84/1991)
30. No. F(E)Spl. 91/ADV.3/15 dated 13.12.1991. (RBE 214/1991)
31. No. F(E)Spl. 94/ADV.3/7 dated 13.10.1995. (RBE 115/1995)
32. No. F(E)Spl. 97/ADV.3/6 dated 29.12.1997. (RBE 191/1997)
33. No. F(E)Spl. 97/ADV.3/6 dated 23.1.1998. (RBE 18/1998)
34. No. F(E)Spl. 98/ADV.3/1 dated 30.3.1998. (RBE 67/1998)
35. No. F(E)Spl. 99/ADV.3/8 dated 14.7.1999. (RBE 174/1999)
36. No. F(E)Spl. 2000/ADV.3/7 dated 16.11.2000. (RBE 197/2000)
37. No. F(E)Spl. 2001/ADV.3/5 dated 17.5.2001. (RBE 92/2001)

(Master Circular No. 50)

The instructions issued by the Railway Board, from time to time, on the subject of various
Interests bearing Advances are contained in several letters. These instructions in respect
of the following advances were consolidated and issued in the form of Master Circular No.
39, in 1991:

i. Advance for purchase of conveyance, i.e. cycle, scooter, motor cycle & car.
ii. Advance for purchase of Personal Computer.
iii. Advance for purchase of table fan.
iv. Advance for purchase of warm clothing.

Consolidated instructions in respect of House Building Advance, which is an interest-

bearing advance but which could not be included in Master Circular No. 39 of 1991, are
contained here.

2 House Building Advance: Grant of House Building Advance is regulated by the rules, laid
down by the Ministry of Urban Development for Central Government employees in general.
These instructions apply mutatis-mutandis to railway employees.

3. Purposes: The advance is admissible for 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, or
ii. *Purchasing a plot and constructing a house thereon, or
iii. * Purchasing and constructing or acquiring a house/ flat through Cooperative
Housing Societies/ Self-financing Schemes/ Housing Boards/ Development
Authorities, Other statutory or semi Govt. bodies and outright purchase from private
 parties.
iv. *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, or
v. Repayment of loan or advance taking from non-Government sources to build the
house, even if the construction has commenced.

[F(E)Spl. 89/Adv. 3/9 dated 31.05.1989 (RBE 130/1989)].

vi. 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 cost ceilings.

Note

1. Advance is permissible for purchase of a house under the Self-Financing

Scheme of Indian Railway Welfare Organisation.

[F(E)Spl. 91/Adv. 3/6 dated 24.04.1991 (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.
3. HBA is not permissible for purchase of land only.
4. HBA is not admissible for acquiring a house on hire-purchase basis, but on
conversion of hire-purchase of flats/ houses into outright purchase this
becomes permissible, provided the purchase is made from State Housing
Boards or similar Government controlled bodies.

[F(E)Spl. 89/Adv. 3/7 dated 8.5.1989 (RBE 121/1989)].

5. HBA is not admissible for payment of a earnest money or initial

registration deposit, to be placed with Cooperative Societies/Self-
financing schemes.

4. Eligibility

i. All permanent railway personnel.

ii. All other officials with not less than 10 years service, provided they do not hold
permanent apptt. under a State Government.
iii. Members of All India Services deputed for service under the Central Government/
Company/ Association/ Body of individuals, wholly or substantially owned or
controlled by the Central Government.
iv. Government servants on deputation to another Department or on foreign service.
v. IES officers on deputation, and
vi. Other officials made eligible in HBA rules, issued by the Ministry of Urban
Development:

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

[Rly. Bd 's letter No. F(E)Spl. 78/Adv. 8/1 dated 19.04.1978 as amended from time to
time].

5. Conditions for Grant of Advance

i. Advance is admissible for constructing 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 cost of land) with proposed additions/expansions
should not exceed cost ceiling limits. In individual cases, the cost ceiling limits may
be relaxed upto 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 advance under these rules
should not exceed the cost ceiling limits laid down.
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
HUF, 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.

[No. F(E) Spl. 84/Adv. 3/2 dated 12.04.1984;

and No. F(E) Spl. 84/Adv. 3/2 date 25.02.1985]

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, the
house/flat should be new and unlived in. The applicant should get it valued at his own
cost by registered valuers.

[Rly. Bd's letter No. F(E)Spl. 78/Adv. 3/10 dated 28.07.1978]

6. Competent Authorities

Sanction of HBA to non-gazetted staff may be accorded by HODs concerned/DRMs.

[No. F(E)Spl. 74/Adv. 3/10 dated 08.02.1977].

Sanction of HBA to Gazetted officers (except HODs), may be accorded by the Addl. GM.
GMs will accord sanction of HBA to HODs, including SDGM and Addl. GMs.

[No. F(E)Spl. 74/Adv. 3/10 dated 02.09.1980].

For sanction of HBA to the GMs/officers of equivalent rank/DG, RDSO, approval of Board
should be obtained and sanction letter should be issued under the signature of Secretary,
Railway Board.

[No. F(E) Spl. 82/Adv. 3/1 dated 24.03.1982]

7. Amount of Advance

The maximum amount of advance shall be:

a. 50 times the basic pays p.m. at the time of sanction; or

[Rly. Bd's letter No. F(E) Spl. 87/Adv. 3/12 dated 09.07.1987 (RBE 369/1987)]

b. Estimated cost of the land-cum-house/flat, or

c. Amount calculated as per the repaying capacity of the official, or
d. Rupees 2.5 lakhs, whichever is the least.

Note.- The maximum amount admissible for enlarging living accommodation in an existing
house is Rs. 60.000/-. In rural areas, the amount of advance shall be restricted to 80 % of
the true cost of land and construction of house or cost of enlarging living accommodation
in an existing house. This can be relaxed to 100% if HOD certifies that the concerned rural
area falls within the periphery of a town/or city.

8. Cost Ceiling

Cost ceilings for the purpose of HBA have now been revised to make in 150 times the basic
pay of the railway servant concerned subject to a minimum of Rs. 2.5 lakhs and a
maximum of Rs. 6 lakhs. These orders take effect from 01.11.1991. In deserving cases, the
above cost ceilings may be relaxed upon a maximum of 25 %, based on merit by
GMs/HODs of zonal Railways/HODs empowered to sanction HBA.

[No. F(E)Spl. 91 /Adv. 3/15 dated 13.12.1991 (RBE214/1991)]

Note.— Pay of both husband and wife who are employed in Central/State Government
public undertakings, semi-Government institutions or local bodies will be taken into
consideration for the purpose of computation of cost ceiling limits.

9. Repaying Capacity

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

Officials retiring after 20 yrs. 35% of basic pay:

Officials retiring after 10 yrs But not more 40% of basic pay & 60 % of DCRG may be
than 20 years. adjusted.
Officials retiring within 10 years. Up to 50% of basic pay; 70 % of DCRG may
be adjusted.

While calculating repaying capacity, maximum no. of instalments for recovery of the
Principal 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 2.5 %
above the prescribed rates of interest will not be taken into account for the purpose of
computing the repaying capacity. Subsequent upward revision of DGRG 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.

[No. F(E) Spl. 87/Adv. 3/12 dated 09.07.1987 (RBE 369/1987)]

10. Interest

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

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

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

A higher rate of interest at 2½% above the prescribed rate will be shown in the sanction,
with a stipulation that rebate of 2½% 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.

[No. F(E)Spl. 80/Adv. 3/4 dated 08.07.1980].

11. Rates of Interest

For advances sanctioned from 01.06.1971 to 31.03.1974 6%

For advances sanctioned from 01.04.1974 to 05.08.1975 6½%

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

06.08.1975 to 01.06.1981 to 31.03.1984 to

31.05.1981 01.04.1984 to 24.11.1985
For the first 6 ½% 7% 7%
25,000
For the next 8% 8 ½% 8 ½%
25,000
For the next 10% 10 ½% 10 ½%
25,000
For the next 12%
50,000
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:

Amount of 25.11.1985 24.6.1987 to 25.7.1990 26.7.1990 onwards

loan to 23.6.1987
sanctioned
Up to Rs. 7% 7% 7½%
25,000
25,001- 7½% 7% 7½%
50,000
50,001- 8% 8% 9%
75,000
75,001- 8½% 8% 9%
1,00,000
1,00,001- 9% 9% 10%
1,25,000
1,25,001- - 9% 10%
1,50,000
1,50,001- - 10% 11%
2,00,000
2,00,001- - 10½% 11½%
2,25,000
2,25,001- - 11% 12%
2,50,000
F(E) Spl. 87/Adv. 3/12 dated F(E)Spl. 90/ Adv. 3/12 dated
09.07.1987 (RBE 369/1987) 16.08. 1990 (RBE139/1990)

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

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 sterilisation and satisfies
the conditions prescribed in Min. of Railway's letter No. F(E)Spl. 79/Adv. 3/15 dated
28.09.1979 and F(E)Spl. 90/Adv. 3/11 dated 10.08.1990 (RBE 135/1990). This is
applicable only in case of officials who underwent sterilisation on or after 01.09.1979, even
after the release of first instalment of HBA. The rebate, however, will be admissible from
the date of sterilisation. 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 1.5 % is also admissible if sterilisation is had after one child. Rebate shall not be
admissible if operation is undergone after drawal of final instalment of HBA.

12. Disbursement

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 drawal of the
advance.

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 utilised for the purchase/
construction of the flat within one month.

[No. F(E)Spl. 86/Adv. 3/7 dated 04.08.1986

and F(E)Spl. 86/Adv. 3/2 dated 17.03.1986]

Advance for construction/enlarging 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.

[No. F(E)Spl. 91/ADV.3/3 dated 6.3.1991. (RBE 44/1991)]

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

Single Storey House: After the agreement in prescribed form is executed and production of
surety bond, 20% 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 Storey House: 15% of the advance or the cost of plot will be disbursed on
executing the agreement. The balance amount will be disbursed in two equal instalments,
(the first on executing the mortgage deed and the second on the construction reaching
plinth level.

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 Government servant concerned but payment
thereof as and when made will be endorsed to the authority directly on the applicant
executing an agreement to repay the loan and interest thereon. He will also produce two
sureties from permanent Government 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
pro-rata basis, calculated with reference to the 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
organisation certifying completion of that much percentage of total work for which the
demand has bee made. On completion of the flat, the Government 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 Government servant concerned. If the Government
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 amount of house building advance will be refunded forthwith
to the Government by the Authority 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 Government servant and adjust the
payment of advance against the cost of construction of the particular category of flat
applied for by the Government servant concerned.

13. Creation of second charge

To meet the balance cost of house/flat, Government servants may create a second charge
on the property subject to the following conditions:

[Authority: Board's No. F(E)Spl. 82/ADV.3/6 dated 1.1.1983

and F(E)Spl. 82/ADV.3/6 dated 8.6.1983.]

1. Prior permission of the Head of the Department should be obtained for the second
charge.
2. The second charge can be created only in respect of loans to be granted for meeting
the balance cost of house/flat.
3. The loan to be granted should be by recognised financial institutions such as:
a. Banking institutions, including Co-op. Banks.
b. Financial corporations set up by the State Governments, which provide loans for
house construction.
c. Apex cooperative housing finance institutions such as Delhi Co-op. Housing
Finance Society.
d. Public companies formed and registered in India with the main object of
carrying on the business of providing long term finance for constructing or
purchase of houses in India for residential purposes like the Housing
Development Finance Corporation Ltd.

The total amount of the HBA granted by the Government and the loan raised from these
institutions taken together should not exceed the prescribed cost ceiling limit applicable to
the Government servant concerned.
14. Repayment of Advance

Repayment of advance with interest thereon shall be repaid in full by monthly instalments
within a period not exceeding 20 yrs. i.e. the maximum no of instalments is 240.

The amount to be recovered shall be fixed in whole rupees. If there is any fraction of a
rupee it shall be recovered in the last instalment.

The recovery should commence as follows:

i. In the case of advance for purchase of land and construction of house, from the pay
of the month following the completion of the house or from the pay of 24th month
after the date on which the advance for purchase of plot was sanctioned, whichever
is earlier.

[No. F(E)Spl. 75/ADV.3/8 dated 16.2.1976]

ii. In the case of advance for construction of house, from the pay of the month following
the completion of the house or from the pay of 18th month after the date of
disbursement of first instalment of the advance, whichever is earlier.
iii. In the case of purchase of ready built house/flat from the pay of the month following
that in which the advance is drawn.

The advance may be repaid in a shorter period also if the official so desires.

The entire advance shall be recovered in full, with interest thereon before the retirement of
the official.

Recovery shall not be held up or postponed without the prior concurrence of the
Government.

If a Government servant ceases to be in service for any reason other than normal
retirement/superannuation or if he dies before repayment of the advance in full, the entire
outstanding amount will become payable forthwith. If, however, the house has not been
completed and mortgaged by that time, the Government may, in deserving cases, permit
repayment of the outstanding amount with interest in suitable instalments.

Failure to repay the advance for any reason whatsoever either by the Government servant
or his successors, as the case may be will entitle the Government to enforce the mortgage
and take action to recover the outstanding amount.

15. Reconveyance

After the advance together with interest thereon is repaid in full, the property mortgaged
to the Government will be reconveyed to the official in the prescribed format. The
reconveyance deed shall be executed by the Head of Department who generally accepts
the mortgage deed on behalf of the President. Registration of reconveyance deed is
compulsory. The expenses in connection with the execution and registration of the
reconveyance deed shall be borne by the official concerned. After the reconveyance deed
has been executed and registered, it shall be made over to the official concerned along
with the mortgage deed, sale deed and other documents deposited by the official. In case
a Government servant dies intestate and the advance is recovered from gratuity or
otherwise reconveyance may be made to the legal heir. If there are more than one legal
heir, the reconveyance can be done in favour of one of them, after obtaining no objection
affidavit from others.

16. Duties of Head of Department

1. He should scrutinise the application and satisfy himself about the facts stated
therein.
2. He should ensure from the title deeds that the applicant possesses a clear title to the
property in question.
3. He should see that the property is free from encumbrances.
4. In the case of purchase of land and construction of house, that HOD should get (1)
the agreement in the prescribed form executed by the official, and (2) surety bond
from a permanent Central Government servant of status not lower than that of the
applicant before the disbursement of first instalment. The mortgage deed should be
 got executed and registered before the second instalment is paid.

In the case of advance for construction of houses, mortgage deed in the prescribed
form should be got executed and registered before payment of the first instalment.
Further the proposed construction is in accordance with approved plan and
specifications.

In the case of advances for purchase of ready built house flats, agreement and
surety bond should be got executed before payment of the advance and mortgage
deed shall be got executed and registered within 3 months of disbursement of the
advance.

In the case of advances to acquire houses through membership of Coop. Gr. Housing
Societies, personal bond, an agreement to mortgage the house/flat followed deposit
of title deeds (as and when available) and a promissory note in respect of the
amount of Principal plus interest at the specified rates should be obtained before
payment of the HBA.

In all cases, sale deeds and other original documents should be obtained along with
the mortgage deed and kept in deposit with the HOD.

In addition to the agreement/mortgage deed, surety from an approved permanent

Government servant should be obtained in the following cases:

a. All applicants who are not permanent Central Government servants.

b. All applicants who are due to retire within a period of 18 months from the date
of application.
c. All applicants who are permanent Central Government servants who require the
advance for the purchase of a ready built house.

In the case of advance for constructing/purchase of ready built house/flat, the HOD
should obtain adequate collateral security wherever the land on which the flats stand
is not mortgaged in favour of the President of India.

In all cases, HOD should satisfy himself that the Government servant establishes his
marketable title to the property in accordance with the procedure prescribed by the
Government before execution of the mortgage deed.

If the terms of sale do not vest title to the land in favour of the Government servant
till a house is erected on the land it should be ensured before execution of the
agreement that the Government servant will be in a position to acquire a clear and
marketable title free from all encumbrances on erection of the house.

He should see that the mortgage deed and the reconveyance deed on release of the
mortgage are duly registered within 4 months from the date of their execution.
Registration is not necessary in the case of surety bonds and agreements under HBA
rules.

He should see that the house is insured as per the rules immediately on purchase
completion and that the premium receipts are regularly obtained for inspection.

He should ensure that the house is maintained in good repair and the necessary
municipal rates and taxes are paid regularly and the requisite certificate furnished
annually until the advance has been repaid in full.

He should ensure that the monthly recovery of instalments towards repayment of the
advance commences from the due date and is made regularly from the monthly
pay/leave salary/subsistence allowance bills of the official.

He should ensure that the amount if any drawn by the official in excess of the
expenditure incurred is returned by the official forthwith together with interest if any
due.

17. Insurance

Immediately on completion of construction/purchase of house/flat, the

Government servant shall insure the house with the recognised units of LIC, for
not less than the amount of advance and shall keep it so insured against
 damage by fire, floods, and lightning till the advance together with interest
thereon is repaid in full and deposit the policy with the HOD. Renewal of
insurance will be done every year and premium receipts produced for inspec​
tion
of HOD regularly.

[No. F(E)Spl. 79/ADV.3/11 dated 31.7.1979]

17. Condonation of non-insurance

Heads of Departments/Authorities empowered to grant HBA are competent to

condone the period of non-insurance up to one year and only cases of non-
insurance in excess of that period as required to be referred to Ministry of Urban
Development. It has to be ensured that the irregularity is not deliberate on the
part of the Government servant but due to circumstances beyond his control.

[No. F(E)Spl. 85/Adv. 3/15 dated 23.02.1985]

18. Residual Powers

All cases involving relaxation of rules/orders and cases in which doubts persist are
required to be referred to Ministry of Urban Development, through administrative Ministry.
Ministry of Urban Development is the nodal Ministry for grant of HBA, and residual powers
vest with them.

19. While referring to this Master Circular, the original circulars mentioned herein and the
provisions of the Code/Establishment Manual should be read for a proper appreciation.
This circular is only a consolidation of existing instructions/and should not be treated as a
substitute of the original circular. In case of doubt, the original circulars should be relied
upon as authority.

20. If any circular having a bearing on the subject which has not been superseded, has
been lost sight of in the preparation of this Circular, the said circular which has been
missed through oversight should not be ignored, but should be treated as valid and
operative.

21. The letters and other references on the basis of which this circular has been prepared
are indicated in the Annexure.