New Delhi, Sep 10 - The government Thursday approved one percent interest rate subvention for housing loans up to Rs.10 lakh, and okayed the allocation of Rs.1,000 crore for the scheme.

'The one percent subvention would be for the first 12 EMIs (equated monthly instalments) on loans up to Rs.10 lakh,' Information and Broadcasting Minister Ambika Soni told reporters after a cabinet meeting.

This, she said, would be for expenses incurred on construction, purchase or extension not exceeding Rs.20 lakh.

In a statement, the government said interest rate subsidy scheme was in line with the announcement by Finance Minister Pranab Mukherjee during a debate on the budget for 2009-10 in July.

The interest subsidy would be provided through the commercial banks and housing finance companies registered with the National Housing Bank.