New Delhi, Jan 24 (IANS): The cabinet on Tuesday approved a new housing scheme to provide interest subsidy for loans up to Rs 2 lakh for construction of new houses or renovation of existing ones in rural areas.

The decision to improve "housing stock and create employment opportunities in rural housing sector" was taken at a cabinet meeting here chaired by Prime Minister Narendra Modi, an official statement said.

However, the scheme will not be extended to those who have already availed benefits under a similar programme, the Pradhan Mantri Aawas Yojana-Grameen (PMAY-G).

"The Union Cabinet has approved a new scheme for promotion of rural housing in the country. The government would provide interest subsidy under the scheme. Interest subsidy would be available to every rural household not covered under the PMAY-G," the statement said.

"The beneficiary who takes a loan under the scheme would be provided interest subsidy for a loan amount up to Rs 2 lakh," it said.

The scheme would be implemented by the National Housing Bank -- a wholly-owned subsidiary of the Reserve Bank of India.

The central government would provide "net present value of the interest subsidy of 3 per cent to the National Housing Bank upfront which will, in turn, pass it to the primary lending institutions (scheduled commercial banks, NBFCs). As a result, the equated monthly instalment (EMI) for the beneficiary would be reduced".

The cabinet also decided that it would take necessary steps for proper convergence with PMAY-G, including technical support to beneficiaries through existing arrangements.