Armed Forces Flag Day Fund - Home Loan Interest Subsidy

What is the AFFDF home loan interest subsidy?

The Armed Forces Flag Day Fund home loan interest subsidy is a welfare grant under which the Kendriya Sainik Board (KSB) reimburses part of the interest paid on a house construction loan. According to the Kendriya Sainik Board scheme page, the subsidy is restricted to war bereaved, war disabled and attributable peacetime casualties only. It is a casualty-linked benefit, not a general housing scheme for ex-servicemen.

The reimbursement is 50 per cent of the interest charged by the lender, calculated on a loan amount of up to Rs 1,00,000. The subsidy runs for a maximum of five years or until the loan is finally repaid, whichever comes first.

Main features

• Funded from the Armed Forces Flag Day Fund, administered by the KSB Secretariat under the Department of Ex-Servicemen Welfare.
• Covers loans from banks and government or public sector institutions, including LIC, GIC and HUDCO.
• Applies to the construction of a house, not to consumer or vehicle loans.
• Paid half-yearly, directly to the applicant.
• Reimburses interest only, the principal is never covered.

How much is the AFFDF home loan interest subsidy worth?

The arithmetic matters here, because the ceiling has not moved in a long time. The scheme originally carried an upper limit of Rs 70,000 and was revised to Rs 1,00,000 in May 1991. That figure is the loan amount used for the calculation, not the subsidy paid.

So on a Rs 1,00,000 slice of a housing loan, the beneficiary receives back half the interest attributable to it for up to five years. On a modern housing loan of Rs 20 lakh or Rs 30 lakh, this covers a small fraction of the interest outgo. Readers should size their expectations accordingly rather than treat this as a housing-finance subsidy comparable to the Credit Linked Subsidy Scheme under PMAY-U.

Who is eligible for the AFFDF home loan interest subsidy?

You can claim if:

• You fall in one of the three categories named by the Kendriya Sainik Board, war bereaved, war disabled, or an attributable peacetime casualty.
• You have taken a loan for the construction of a house from a bank or from a government or public sector institution such as LIC, GIC or HUDCO.
• Your repayment has been regular and the repayment schedule has not been changed, both of which the bank must certify.
• Your claim is recommended by your Zila Sainik Board.

You cannot apply if:

• You are an ex-serviceman with no war or attributable casualty link. This is the single largest reason claims fail, the scheme is not open to all ex-servicemen despite being an AFFDF grant.
• Your loan is from a private financier, cooperative society or individual outside the bank and public sector institution framework.
• The loan is for purchase of a flat, repairs, land, or any purpose other than construction of a house, as the scheme is framed around construction.
• You have rescheduled or defaulted on the loan, since the banker's certificate must confirm both regular repayment and an unchanged schedule.
• You have already drawn five years of subsidy, or the loan has been fully repaid.
• You are a serving soldier. The benefit is for ex-servicemen and the families of casualties.

What documents are required?

A sample application form is published as a download on the KSB scheme page at ksb.gov.in/interest-subsidy-on-home-loan.htm.

How to apply for the AFFDF home loan interest subsidy

1. Confirm that you fall in one of the three eligible categories — war bereaved, war disabled or attributable peacetime casualty, and collect the documents that establish it.
2. Download the sample application form from the KSB scheme page at ksb.gov.in/interest-subsidy-on-home-loan.htm and complete it.
3. Obtain the banker's certificate confirming that there has been no change in the repayment schedule and that repayment has been regular, together with a statement of the interest actually paid during the period being claimed.
4. Attach attested copies of your Ex-Servicemen Identity Card and Discharge Book, and your bank account details with IFSC.
5. Submit the complete claim at your Zila Sainik Board, where the Zila Sainik Welfare Officer verifies the originals and signs the recommendation.
6. The ZSB forwards the claim to the KSB Secretariat, where the Accounts Section processes it and the Secretary, KSB accords approval.
7. On approval, the subsidy is released half-yearly by ECS into your bank account. Repeat the claim with a fresh interest statement for each subsequent period, up to the five-year limit.

Common reasons claims are rejected

• The applicant is not a war bereaved, war disabled or attributable peacetime casualty case.
• The banker's certificate is missing, or shows a rescheduled loan or irregular repayment.
• The claim shows interest due rather than interest actually paid. The scheme reimburses only what has been paid.
• The lender is outside the bank or public sector institution framework.
• Discharge Book or ESM identity card copies are unattested or incomplete.
• The five-year entitlement has already been exhausted.
• The claim was submitted directly to KSB instead of through the Zila Sainik Board.

Help and grievance redressal

• JD (Welfare), KSB Secretariat: 011-20862446, jdwelfare-ksb@desw.gov.in
• KSB grievances: Post Grievance and Track Grievance options on ksb.gov.in
• Postal address: Secretary, Kendriya Sainik Board, West Block-IV, Wing-VII, RK Puram, New Delhi 110066
• Local help: your Zila Sainik Welfare Office, which is the first point of contact for every KSB welfare grant

There is no fee for this claim and no agent is needed. Related AFFDF grants, the serious disease treatment grant and the mobility equipment grant; follow the same Zila Sainik Board route and can be claimed separately if you qualify.