Credit Linked Subsidy Scheme (CLSS)

The Pradhan Mantri Awas Yojana is an initiative that was introduced by Prime Minister Narendra Modi in the year 2015. Through this scheme, the Government of India aims to provide affordable housing to the urban poor population in India by 2022. Under the tagline “Housing for all”, this scheme focuses on slum rehabilitation, Credit Linked Subsidy Scheme (CLSS), making housing affordable for all, and offer a subsidy for survey-led independent house construction or renovation.

Among the four focus areas mentioned above, CLSS is the only scheme that will be implemented as a central sector scheme. The remaining schemes will be implemented as sponsored schemes. Through the Credit Linked Subsidy Scheme, the Government of India aims at increasing the credit flow in institutions to meet the housing needs of the urban poor population in our country.

Credit Linked Subsidy Scheme will be implemented by two central nodal agencies in India, namely Housing Urban Development Corp and National Housing Bank. Apart from pumping the credit flow required to meet the housing needs, this scheme will also focus on the demand aspects of affordable housing finance segment.

The benefits under the CLSS can be availed by Economically Weaker Sections or Low Income Groups who are looking for housing loans from financial institutions and banks that are participating in the Pradhan Mantri Awas Yojana Scheme. Borrowers can Credit Linked Subsidy for new construction or for adding a room to their existing house.

The houses that are constructed or acquired by taking the benefits under the Pradhan Mantri Awas Yojana scheme will have to be registered in the name of the female head of the household. The beneficiaries have an option to register it jointly in the name of the male and female head of the family. In special cases where is not no female head in the family, the house can be in the name of a male head of the family.

Also, this has to be the first house owned by the beneficiary. The beneficiary family should not own a pucca house in his/her or in the name of any member of his/her family in any part of India.

CLSS for Economically Weaker Section (EWS) and Low Income Groups (LIG)

The prime objective of the Pradhan Mantri Awas Yojana - Credit Linked Subsidy Scheme is to help the urban poor population by increasing the institutional credit flow to meet their housing needs. Economically Weaker Sections and Low Income Groups who are seeking for housing loans from financial institutions and banks will be eligible for an interest subsidy of 6.5% for a period of 20 years or for the tenure of the loans, whichever is lower. This interest rate subsidy will be credited during the initial stage of the loan to the beneficiary’s loan account through the lending institute which will lower their Equated Monthly Installments (EMIs) from the beginning itself.

The funds borrowed by Economically Weaker Sections can be used to construct a new house or to add a room, kitchen, or balcony to their existing house. The beneficiaries under Economically Weaker Sections can have annual income up to Rs.3 lakh. Also, beneficiaries with an annual income of Rs.3 lakh to Rs.6 lakh fall under the Low Income Group category.

The carpet area for Economically Weaker Sections can go up to 30 square metres and the carpet area for Lower Income Groups can go up to 60 square metres. Also, when it comes to EWS and LIG, preference will be given to women, Scheduled Tribes, Scheduled Castes, backward classes, minorities, people with disabilities, and transgenders.

CLSS for Middle Income Group (MIG)

Under the Middle Income Group, there are two sets of beneficiaries. The first set MIG-I covers people with an annual income of Rs.6 lakh to Rs.12 lakh p.a. The second set called MIG-II covers people who fall in the income group of Rs.12 lakh to Rs.18 lakh p.a. An Interest rate subsidy of 4% and 3% will be given to those who fall under MIG-I and MIG-II respectively. For both sets of beneficiaries, the maximum tenure of loan can go up to 20 years. The maximum loan amount can go up to Rs.9 lakh for MIG-I and Rs.12 lakh for MIG-II. Also, the discount rate for Net Present Value(NPV) is 9% for both MIG-I and MIG-II.

When CLSS was introduced, the carpet area was set at 90 square metres for MIG-I and 110 square metres for MIG-II. Recently, the Cabinet increased the carpet area from 90 square metres (968.752 sq ft) to 120 square metres (1291.668 sq ft.) for MIG-I. The carpet area for MIG-II was also increased to 150 square metres (1614.585 sq ft) which were 110 square metres (1184.03 sq ft) previously.

Credit Linked Subsidy Scheme Helpline Number

You can call the CLSS toll-free helpline numbers for any enquiries or concerns regarding CLSS.

The CLSS toll-free number for Housing and Development Corporation (HUDCO) is 1800116163.

The CLSS toll-free numbers for National Housing Bank (NBC) are 1800113377 and 1800113388.

Steps for availing PMAY Subsidy Scheme

• You will have to first check if you are eligible to apply for the Home Loan Credit Linked Subsidy Scheme.
• If you fall meet all the eligibility criteria, you will have to contact the financial institutions or banks that are participating the PMAY scheme.
• Fill the PMAY Home Loan Credit Linked Subsidy Application form and submit it with the necessary documents to the lender.
• After verification, the housing loan amount will be disbursed to your bank account.
• After the loan is disbursed, your lender will get in touch with the nodal agencies and will initiate the process of claiming interest subsidy.
• Upon verification, the interest subsidy will be credited to your loan account and your loan amount will be adjusted which will lower your Equated Monthly Installment amount.

Key points on Credit Linked Subsidy Scheme

• The Credit Linked Subsidy Scheme (CLSS) is a benefit under the Pradhan Mantri Awas Yojana which focuses on helping the Middle Income Groups, Economically Weaker Sections, and Lower Income Groups in India by bringing down their housing loan EMIs by over Rs.2,000 per month by offering an interest subsidy.
• CLSS scheme is effective from 1 January 2017. Those who were sanctioned home loans and whose applications are under consideration since the beginning of the year will be eligible for interest subsidy.
• Over 70 lending institutions which include 45 Housing Finance Companies and 15 scheduled banks have come forward and signed the Memoranda of Understanding with the nodal agencies showing their support in implementing the PMAY Urban Scheme.
• To be eligible to avail a housing loan under CLSS, the beneficiary family should not own a pucca house in his/her or in the name of any member of his/her family in any part of India.
• Economically Weaker Sections and Low Income Groups who are seeking for housing loans from financial institutions and banks will be eligible for an interest subsidy of 6.5% for a period of 20 years or for the tenure of the loans, whichever is lower.
• This interest rate subsidy will be credited during the initial stage of the loan to the beneficiary’s loan account through the lending institute which will lower their Equated Monthly Installments (EMIs).
• The funds borrowed under CLSS can be used to construct a new house or to add a room, kitchen, or balcony to their existing house.
• The beneficiaries under Economically Weaker Sections can have annual income up to Rs.3 lakh. Also, beneficiaries with an annual income of Rs.3 lakh to Rs.6 lakh fall under the Low Income Group category.
• The carpet area for Economically Weaker Sections can go up to 30 square metres and the carpet area for Lower Income Groups can go up to 60 square metres.
• Preference will be given to women, Scheduled Tribes, Scheduled Castes, backward classes, minorities, people with disabilities, and transgenders.
• Under the Middle Income Group, there are two sets of beneficiaries. The first set MIG-I covers people with an annual income of Rs.6 lakh to Rs.12 lakh p.a. The second set called MIG-II covers people who fall in the income group of Rs.12 lakh to Rs.18 lakh p.a.
• An Interest rate subsidy of 4% and 3% will be given to those who fall under MIG-I and MIG-II respectively. For both sets of beneficiaries, the maximum tenure of loan can go up to 20 years.
• The maximum loan amount can go up to Rs.9 lakh for MIG-I and Rs.12 lakh for MIG-II. Also, the discount rate for Net Present Value(NPV) is 9% for both MIG-I and MIG-II.
• Recently, the Cabinet increased the carpet area from 90 square metres to 120 square metres for MIG-I. The carpet area for MIG-II was also increased to 150 square metres which was 110 square metres previously.

Frequently asked questions on Credit Linked Subsidy Scheme

1. Is there a loan limited on the Pradhan Mantri Awas Yojana - Credit Linked Subsidy Scheme?

   No, there is no loan limit, though the loan subsidy is limited to Rs.6 lakh only.

2. Is the interest rate floating or fixed?

   The interest rate for the Pradhan Mantri Awas Yojana - Credit Linked Subsidy Scheme is fixed at 6.5% for a period of 15 years.

3. Do banks across the country offer the Credit Linked Subsidy?

   Yes, all banks listed under the RBI offer the Credit Linked Subsidy.

4. Who can avail an interest subsidy under the Credit Linked Subsidy Scheme?

   A beneficiary family not owning a house in any part of the India is eligible for this subsidy subject to income criteria.

5. Is the interest subsidy offered under the Credit Linked Subsidy Scheme applicable to houses in rural areas in India?

   No. The interest subsidy offered under the Credit Linked Subsidy Scheme is not applicable to houses in rural areas in India.

6. Can a beneficiary choose the loan term more the 20 years?

   Yes. A beneficiary can choose a loan term more than 20 years provided the lender agrees.

7. Is there any limit on the cost of the property to avail benefits under the Credit Linked Subsidy Scheme?

   No. There is no limit on the cost of the property but the subsidy will be limited to the loan amount defined against each category and additional amount will be at non- subsidized rate of interest.

8. Can a Non-Resident Indian avail this subsidy?

   Yes. A Non-Resident Indian can avail subsidy under the Credit Linked Subsidy Scheme.

9. Should I give any additional documents to avail this subsidy?

   No. A self-declaration form signed by the beneficiary that he/she does not own any pucca house is sufficient.

10. What happens if the construction of the house is stalled after the subsidy is disbursed?

    In that case, the subsidy will be recovered and the lender will refund it to the Central Government of India.