Direct loan subsidy for home buyers
DEMAND BOOST Home buyers to get direct loan subsidy for buying affordable housing under the CLSS-MIG
The housing sector is set for a demand boost in the affordable segment from the middle income group (MIG) home buyers as the credit linked interest subsidy scheme for middle income groups (CLSS-MIG) gets into implementation mode. The long-awaited guidelines for the scheme were finally announced this week. The scheme was launched in December last year.
Prime Minister Narendra Modi had announced interest subsidy of 4% on housing loans of up to R9 lakh of those with an income of R12 lakh per year and of 3% on housing loans of up to R12 lakh of those earning
R18 lakh per year.
Who is eligible?
Middle income groups (MIG) with annual incomes of above
R6 lakh and up to R18 lakh 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 1 this year are also eligible for interest subsidy. Housing loans above R9 lakh and R12 lakh will be at non-subsidised rates.
While defining the beneficiary family as comprising husband, wife and unmarried daughters and sons, even unmarried and earning young adults have been made eligible for taking the benefit of interest subsidy under CLSS(MIG), for acquisition or construction of a new house, including repurchase. 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.
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 installment (EMI). The total interest subsidy to be paid to MIG people on R9 lakh loan comes to R2.35 lakh and on a loan of R12 lakh, it comes to R2.3 lakh per beneficiary.
Interest subsidy will be provided on loans for the construction or acquisition of house with carpet area of 90 sq m by those earning R12 lakh per annum and of 110 sq m by those earning R18 lakh per year.
National Housing Bank (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 will 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.
Small finance banks and non banking finance company-micro finance institutions have been recognised 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.
Seventy lending institutions, including 45 housing finance companies, 15 scheduled banks, two regional rural banks, one cooperative bank, four small finance banks and three nonbanking finance companies-micro finance institutions have signed memoranda of understanding with NHB for implementing the CLSS (MIG) component of PMAY (Urban).
While the new CLSS (MIG) covers people with income of up to R12 lakh and R18 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 R3 lakh and R6 lakh per year, respectively. Under CLSS (EWS/ LIG), interest subsidy of 6.5% is being provided on a loan of up to R6 lakh. The tenure of this loan is now increased to 20 years from the earlier 15. Total interest subsidy available to each beneficiary under this component is R2.3 lakh.