The system for providing housing loans to government employees will be revised

The Ministry of Public Administration, Provincial Councils, and Local Government has issued a new circular amending the provisions of the Establishments Code regarding the granting of housing and property loans to public servants under concessionary interest rates. According to this circular, No. 08/2026, issued on 2026.02.27, the maximum loan amount a public officer can obtain and the methodology for calculating the relevant interest rates have been subjected to new amendments.

This has been issued by Ministry Secretary S. Alokabandara, with the concurrence of the General Treasury.

According to this new amendment, the maximum loan amount a public officer is entitled to is the lower of two values: his or her consolidated salary for seven (07) years without allowances, or an amount of fifty lakhs (5,000,000) rupees. Accordingly, these limits will apply to public officers when obtaining housing and property loans in the future.

The maximum interest rate charged by banks for these loans is calculated by adding a maximum administrative fee of two percent (2%) to the Average Weighted Prime Lending Rate (AWPLR) published for December of the year preceding the relevant year. A portion of this total interest will be borne by the government, and the remainder must be paid by the officer. For a loan amount up to thirty lakhs (3,000,000) rupees, the government will pay an interest rate of four percent (4%), and the officer must pay the remaining percentage after deducting that four percent from the total bank interest (AWPLR + 2%). Similarly, for loan amounts from thirty lakhs up to the maximum of fifty lakhs (5,000,000) rupees, the government will pay an interest rate of two percent (2%), and the officer must pay the remaining value after deducting that two percent from the total bank interest. Notably, this interest rate determined for the obtained loan amount will remain fixed without any change until the loan is fully repaid.

These new interest rates and amended provisions will be effective only for housing and property loans granted on or after March 1, 2026 (2026.03.01). These new amendments do not apply to loans already obtained under the previous Circular No. 15/2007 and its subsidiary circulars. In addition, Appendix 28 of the relevant chapter of the Establishments Code has been amended to update the list of banks from which housing and property loans can be obtained, and all other provisions related to the granting of loans by banks to public officers will remain in force without any changes.