The window of fulfilling the aspiration of owning a pucca house for the tax-paying large middle class population, announced by Prime Minister Narendra Modi in his address to the Nation on December 31st last year, has been made operational from the next day, i.e January 1st this year. This interest subsidy scheme has been named as ‘Credit Linked Subsidy Scheme for Middle Income Groups – CLSS(MIG)’.
Operational Guidelines for CLSS(MIG) to this effect were released here today by Minister of Housing and Urban Poverty Alleviation, M Venkaiah Naidu.
According to the guidelines, middle income groups (MIG) with annual income of above Rs 6.00 lakh and up to Rs 18.00 lakh per annum are eligible for interest subsidy on housing loans under the new CLSS(MIG). Those who have been sanctioned housing loans and whose applications are under consideration since January first this year are also eligible for interest subsidy.
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Speaking on the occasion, Naidu said that middle income groups make substantial contribution to the economic growth of the country, besides paying taxes, and deserved support to fulfill the dream of owning a house, which is a basic and genuine aspiration. He further said that large-scale incentivisation of affordable housing will boost the real estate sector, resulting in employment generation as well. He urged nanks and other lending institutions to adopt a pro-active approach to reach the benefits to the MIG people.
Rao Inderjit Singh, Minister of State for HUPA, said Housing for All Mission is the most important initiatives of the government to ensure a decent house for all by 2022.
Since the middle income groups are better equipped to take advantage of the interest subsidy scheme in quick time and to enable meeting the Housing for All target by 2022, implementation of CLSS(MIG) is initially envisaged for one year.
The Prime Minister has announced interest subsidy of 4% on housing loans of up to Rs 9.00 lakh of those with an income of Rs 12.00 lakh a year and of 3% on housing loans of up to Rs 12.00 lakh of those earning Rs 18.00 lakh per annum.
In the guidelines for CLSS(MIG), the tenure of loan has been stipulated to be 20 years or that preferred by the beneficiary, whichever is lower. The total interest subsidy accruing on these loan amounts will be paid to the beneficiaries up front in one go, thereby reducing the burden of Equated Monthly Instalments (EMIs). The total interest subsidy to be paid to MIG people on Rs 9.00 lakh loan comes to Rs 2.35 lakh and on a loan of Rs12.00 lakh, it comes to Rs 2.30 lakh per beneficiary.
While defining the beneficiary family as comprising of wife, husband and unmarried daughters and sons, the guidelines, in an acknowledgement of the aspirations of the youth, have made even unmarried and earning young adults eligible for taking the benefit of interest subsidy under CLSS(MIG), for acquisition/construction of a new house, including repurchase.
Interest subsidy will be provided on loans for construction/acquisition of house with carpet area of 90 sq.mtres by those earning Rs.12.00 lakh per annum and of 110 sq.mt by those earning Rs.18.00 lakh per annum.
Under the guidelines, preference is to be given to women with overriding preference to widows, single working women, persons belonging to Scheduled Castes and Scheduled Tribes, backward classes, differently abled and transgender people.
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Small Finance Banks and Non Banking Finance Company-Micro Finance Institutions also have been recognized to function as Primary Lending Institutions to widen the scope of implementation of CLSS(MIG) in addition to Scheduled Commercial Banks, Housing Finance Companies, Regional Rural Banks, State and Urban Cooperative Banks for accepting applications directly from beneficiaries and advancing loans under the scheme.
While the new CLSS(MIG) covers people with income of up to Rs.12 lakh and Rs.18 lakh a year, the CLSS component of PMAY(Urban) launched in June, 2015 and applicable to Economically Weaker Sections (EWS) and Low Income Group (LIG) covers urban poor with income levels of Rs 3.00 lakh and Rs 6.00 lakh per annum, respectively. Under CLSS(EWS/LIG), interest subsidy of 6.50% is being provided on a loan of up to Rs 6.00 lakh. Tenure of this loan is now increased to 20 years from the earlier 15 years to enable easy repayments. Total interest subsidy available to each beneficiary under this component is Rs 2.30 lakh.
Sriram Kalyanaraman, MD and CEO of National Housing Bank, informed that interest subsidy of 4% under CLSS(MIG) will bring down Equated Monthly Installments of beneficiaries by Rs 2,062 per month on a housing loan of Rs 9.00 lakh and interest subsidy of 3% will bring down EMI by Rs 2,019 on a loan of Rs 12.00 lakh, taking normal housing loan interest rate as 8.65%. He further said during 2015-16, against total new bookings of 28.90 lakh units with loans of up to Rs.10 lakh each, Public Sector Banks and Housing Finance Banks advanced loans of Rs 9.50 lakh crore and accounted for 64% of total bookings.
70 lending institutions, including 45 Housing Finance Companies, 15 Scheduled Banks, 2 Regional Rural Banks, 1 Cooperative Bank, 4 Small Finance Banks and 3 Non-Banking Finance Companies-Micro Finance Institutions, signed Memoranda of Understanding with National Housing Bank (NHB) today for implementation of the CLSS(MIG) component of PMAY(Urban).
NHB and Housing and Urban Development Corporation (HUDCO) have been designated as Central Nodal Agencies (CAN) for implementation of CLSS for both MIG and EWS/LIG, who would reimburse interest subsidy to Primary Lending Institutions (PLIs) based on the loans advanced to beneficiaries by PLIs. PLIs include Scheduled Commercial Banks, Housing Finance Companies, Small Housing Banks, State and Urban Cooperative Banks, Regional Rural Banks and NBFC-MFI.
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Beneficiaries eligible for interest subsidy under CLSS can directly apply to PLIs, and PLIs after due verification of applications will sanction loans and there after claim subsidy from CNAs.
No processing fee will be charged by PLIs from the applicants under CLSS.