Credit Linked Subsidy Scheme for Middle Income Groups- Main Highlights

If you fall under the income bracket of INR.6 lakh – 18 Lakh per annum, then you are lucky one and will get the privilege of enjoying interest subsidy given on housing loans under new Credit Linked Interest Subsidy Scheme for people of Middle Income Groups. Good news, is that people who already have a sanctioned loan with them or the one having application under process from January 1,2017 will also get the benefit of this scheme.

This scheme was declared on 31st, December, 2016 by our honorable Prime Minister Narendra Modi and named ‘Credit Linked Subsidy Scheme for Middle Income Groups – CLSS (MIG). Last Wednesday (22nd March, 2017) Minister of Housing and Urban Poverty Alleviation, M Venkaiah Naidu released the details of the operational guidelines of this scheme.

There are some important things which are must to know about this scheme:

• People with annual income ranging between INR: 6 Lakh to INR. 18 Lakh will fall in the Middle income groups (MIG) and will be considered eligible for this scheme benefits. Candidates with sanctioned housing loans or loans under process since January,2017 will also get the benefit of interest subsidy
• As per the announcement made by Modi Ji home loans up to INR.9 Lakh will get interest subsidy of 4% and that will be applicable for people having annual income of INR.12 lakh. The subsidy interest will be 3% for housing loans up to INR.12 Lakh for people having an annual income of INR.18 Lakh
• 4% interest subsidy under this scheme can lower down the EMI of loans amounting to 9 Lakh by INR. 2,062 monthly. In a similar manner 3% interest subsidy will lower down the EMI of Loan of 12 Lakh by INR: 2,019, when considering the interest rate of Home loan as 8.65%.
• The loan tenure needs to be 20 years or as requested by the applicant- which ever of the 2 will be low .will be taken into consideration. Accumulated interest subsidy calculated on the loan amount will be credited to beneficiary in one go upfront. This will support in reducing the pressure of EMI’s
• The sum of interest subsidy which is payable to people in MIG group will be INR: 2.35 lakh for 9 Lakh loan and for a loan amount of 12 lakh it will come to INR: 2.30 lakh. The current new CLSS (MIG) will include people having annual income up to 12 lakh and 18 lakh respectively. The CLSS component which is part of PMAY (Urban) that got launched in June, 2015 for Economically Weaker Sections (EWS) and Low Income Group (LIG) also offers this benefit to urban poor with an annual income of INR.3.00 lakh and INR 6.00 lakh respectively.
• For CLSS (EWS/LIG), the calculation of interest subsidy is made @ 6.50% calculated on loan amount of maximum 6 Lakh. The loan period is now increased to 20 years from 15 years for easy repayment facility. The accumulated sum of the subsidy for the beneficiary in this case will be INR: 2.30 Lakh.
• By beneficiaries here we mean spouse, sons and unmarried daughter. In the guidelines it is clearly mentioned that unmarried as well as young adults with earning will be considered eligible for the benefit under CLSS (MIG), for construction and acquisition of new property which also covers repurchase.
• This benefit will be given on loans for house acquisition/ construction having a carpet area of 90 sq m for people with annual income of 12 lakhs and 110 sq m for people with annual income of 18 lakh. As per guidelines some category of women will get preference which includes widows, and unmarried working women. Apart from that people from S C and S T, backward classes, transgender and differently abled group will also get the benefit.
• To widen up the benefit and scope of CLSS (MIG), power is given to Small Finance Banks and Non Banking Finance Company-Micro Finance Institutions to act as Primary Lending Institutions besides existing Scheduled Commercial Banks, Regional Rural Banks, Housing Finance Companies, State and Urban Cooperative Banks. All these institutions can now accept application from the beneficiaries directly and offer loans under such schemes.

Memoranda of Understanding signed with National Housing Bank (NHB) for executing CLSS(MIG) component of PMAY(Urban) by 70 lending institutions which includes:

1. Housing Finance Companies: 45

2. Scheduled Banks: 15

3. Regional Rural Banks: 2

4. Cooperative Bank: 1

5. Small Finance Banks: 4

6. Non-Banking Finance Companies-Micro Finance Institutions: 3