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Home loan applicants with annual incomes from ₹6 lakh to ₹18 lakh per annum will be eligible for interest subsidy on housing loans.
The subsidy has been enabled under the new Credit Linked Subsidy Scheme for Middle Income Groups (CLSS-MIG) by the Ministry of Housing and Urban Poverty Alleviation.
The scheme has been envisaged for one year. In a press statement, the government said, “Those who have been sanctioned housing loans and whose applications are under consideration since January 1 this year are also eligible for interest subsidy.”
Minister of Housing and Urban Poverty Alleviation M Venkaiah Naidu said, “Large scale incentivisation of affordable housing will boost real estate sector, resulting in employment generation as well.”
Prime Minister Narendra Modi had earlier announced an interest subsidy of 4 per cent on housing loans of up to ₹9 lakh for those earning up to ₹12 lakh per year. Modi had also announced a subsidy of 3 per cent on housing loans of up to ₹12 lakh for those earning up to ₹18 lakh per year.
In the guidelines, the tenure of loan has been capped at 20 years. The total interest subsidy accruing on these loans amounts will be paid to the beneficiaries up front, thus reducing the burden of Equated Monthly Instalment (EMI). The total interest subsidy to be paid to MIG appliants on a ₹9-lakh loan comes to ₹2.35 lakh and on a loan of ₹12 lakh, it comes to ₹2.30 lakh per beneficiary.
Interest subsidy will be provided on loans for construction or acquisition of a house with a carpet area up to 90 sqm by those earning ₹12 lakh per annum. Those earning up to ₹18 lakh per year can avail themselves of the subsidy on a purchase of a house with a carpet area up to 110 sqm.
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.
National Housing Board (NHB) and Housing and Urban Development Corporation (HUDCO) have been designated as Central Nodal Agencies for implementation of CLSS.
These agencies would then reimburse the 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 the lending institutions. After verification of applications, the lenders will sanction loans and then claim subsidy from the nodal agencies.
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