New Delhi: The window of fulfilling the aspiration of owning a house for the tax paying large middle class population, announced by Prime Minister Narendra Modi on December 31st last year has been made operational from January 1st this year.


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This interest subsidy scheme has been named as ‘Credit Linked Subsidy Scheme for Middle Income Groups – CLSS(MIG)’.


While releasing the guidelines of Credit Linked Subsidy Scheme (CLSS) for MIG category, Union Urban Development Minister M Venkaiah Naidu on Wednesday said that it is expected to give benefit of up to Rs 2.35 lakh for every homebuyer availing bank loan.


He further said that large scale incentivisation of affordable housing will boost real estate sector resulting in employment generation as well. Naidu urged the banks and other lending institution to adopt a pro-active approach to reach the benefits to MIG people.


 



The new scheme, in order to expand institutional credit flow to the housing needs of urban poor will implement credit linked subsidy component as a demand side intervention.


Interest subsidy will be credited upfront to the loan account of beneficiaries through primary lending institutions resulting in reduced effective housing loan and equated monthly instalment (EMI). The Net  Present Value (NPV) of the interest subsidy will be calculated at a discount rate of 9 percent.


 


Credit Linked Subsidy Scheme for MIG


The newly launched CLSS for MIG covers two income segments in the MIG viz. Rs 6,00,001 to Rs 12,00,000 (MIG-I) and Rs 12,00,001 to Rs 18,00,000 (MIG-II) per annum. In the MIG-I, an interest subsidy of 4 percent has been provided for loan amounts up to Rs 9 lakh while in MIG-II, an interest subsidy of 3 percent has been provided for loan amount of Rs 12 lakh.


The interest subsidy will be calculated at 9 percent NPV over a maximum loan tenure of 20 years or the actual tenure, whichever is lesser. Housing loans above Rs 9 lakh and Rs 12 lakh will be at non-subsidized rates.  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 lakh  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.


Interest subsidy will be provided on loans for construction/acquisition of house with carpet area of 90 square meters by those earning Rs 12 lakh per annum and of 110 square meters by those earning Rs18 lakh per year.


Housing and Urban Development Corporation (HUDCO) and National Housing Bank (NHB) have been identified as Central Nodal Agencies (CNAs) to channelize this subsidy to the lending institutions and for monitoring the progress of this component. Ministry may notify other institutions as CNA in future. Under the Mission, beneficiaries can take advantage under one component only.



 


Credit Linked Subsidy Scheme for EWS/LIG


Beneficiaries of Economically Weaker section (EWS) and Low Income Group (LIG) seeking housing loans from Banks, Housing Finance Companies and other such institutions would be eligible for an interest subsidy at the rate of 6.5 percent for a tenure of 20 years or during tenure of loan whichever is lower.


The credit linked subsidy will be available only for loan amounts upto Rs 6 lakhs and additional loans beyond Rs 6 lakhs, if any, will be at nonsubsidized rate. Credit linked subsidy would be available for housing loans availed for new construction and addition of rooms, kitchen, toilet etc. to existing dwellings as incremental housing.


The carpet area of houses being constructed under this component of the mission should be up to 30 square metres and 60 square metres for EWS and LIG, respectively in order to avail of this credit linked subsidy. The beneficiary, at his/her discretion, can build a house of larger area but interest subvention would be limited to first Rs 6 lakh only.