Credit-linked subsidy can often be baffling

You must understand the rules applicable to you before seeking a loan

The regulations for creditlinked subsidy scheme (CLSS) under the Pradhan Mantri Awas Yojana (PMAY) may sometimes be confusing even for lenders.

Consequently, a person who might be eligible for the subsidy may lose it.

While taking a home loan, a bank executive told Suhas Joshi that he will not get the home loan as his the tenure is 23 years. The regulation says loans up to 20 years are eligible for the scheme. However, as Rakesh Makkar, CEO, Grihashakti – Fullerton India Home Finance Company says: “He would still be eligible if he meets all the other criteria. In such cases, the tenure used for computation of the subsidy would be 20 years.”

Then, there is the ownership issue. According to the regulations, no member of a family should own a house to avail the subsidy. The language used in the regulations to define family can also lead to confusion on the eligibility of a candidate. It says that a family is husband, wife and unmarried children. What about a child who is an adult, unmarried and an earning member? “An adult, unmarried and earning member can apply even if his parents own a house,” Monu Ratra, CEO, India Infoline Housing Finance. But if the father and son purchase two separate houses and both apply for subsidy individually, it’s not clear whether both can avail it.

Home buyers also need to understand the rules that apply to them. The CLSS is divided into two categories – one is the economically weaker section (EWS) and lower income group, and the other is middle-income group-I (MIG-I) and middle-income group-II (MIG-II). While most regulations are same for the two categories, some rules differ. In EWS/LIG category, a woman applicant is mandatory – either she can be the sole or joint owner. In MIG-I and MIG-II, woman ownership is not compulsory. There’s no restriction on the size of the house for the EWS/LIG category though the subsidy will be calculated on the specified size (30 sq metres and 60 sq metres). For MIG-I and MIG-II, the government has capped the size of the residential unit to 160 square metres (1,722 square feet) and 200 square metres (2,153 square feet) respectively.

The good news is that even if you have missed out on availing the scheme due to confusion in regulations or because a lender’s executive misguided you, there’s still a chance. “If an individual meets the eligibility norms but had not availed the subsidy at the time of buying the house, he or she can still apply for it through the lender,” says Mini Nair, executive director and CEO, Essel Home Finance.