Credit Linked Subsidy Scheme for Middle Income Groups

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 has been made operational from January 1st 2017.

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 have been released.

Middle Income Groups (MIG) with annual incomes of above Rs.6.00 lakhs and up to Rs.18.00 lakhs per year 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.

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.

Prime Minister has announced interest subsidy of 4% on housing loans of up to Rs.9.00 lakhs of those with an income of Rs.12.00 lakh per year and of 3% on housing loans of up to Rs.12.00 lakh of those earning Rs.18.00 lakh per year.

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 there by reducing the burden of Equated Monthly Instalment (EMI). The total interest subsidy  to be paid to MIG people on Rs.9.00 loan comes to Rs.2.35 lakh and on a loan of Rs.12.00 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 by those earning Rs.18.00 lakh per year.

Under the Guidelines, preference is to be given to women with overriding preference towidows, single working women, persons belonging to Scheduled Castes and Scheduled Tribes, Backward Classes, Differently abled and Transgender people.

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 per 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 year 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.

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 today signed Memoranda of Understanding with National Housing Bank (NHB) today for implementation of 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.

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.