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Interest subsidy scheme on housing loans for middle income groups effective from Jan
May 26, 2020
The Narendra Modi government’s credit-linked interest subsidy scheme for housing loans taken by people in mid-income groups has been made effective from 1 January under which EMIs will go down by over Rs 2,000 per month.
Prime Minister Narendra Modi had on 31 December last year announced the Credit Linked Subsidy Scheme for Middle Income Groups —CLSS(MIG). Under the scheme, an interest subsidy of 4% on housing loans of up to Rs 9 lakh for those with an income of Rs 12 lakh per year and of 3% on housing loans of up to Rs 12 lakh for those having an income of Rs 18 lakh per year will be given.
At an event where ‘Operational Guidelines for CLSS (MIG)’ were released, National Housing Bank MD and CEO Sriram Kalyanaraman said EMIs for middle income group beneficiaries under the scheme will come down by over Rs 2,000 per month. The interest subsidy of 4% under the scheme will bring down EMI by Rs 2,062 per month on a housing loan of Rs 9 lakh and interest subsidy of 3% will reduce the monthly outgo by Rs 2,019 on Rs 12 lakh loan, considering normal housing loan interest rate of 8.65% cent, he said.
With the scheme coming into effect from January 1, those who were sanctioned home loans and whose applications are under consideration since beginning of the year will be eligible for interest subsidy of up to Rs 2.35 lakh.
Middle income groups with annual incomes above Rs 6 lakhs and up to Rs 18 lakhs per year are eligible for interest subsidy on housing loans under the new CLSS(MIG).
Housing and Urban Poverty Alleviation Minister M Venkaiah Naidu said middle income groups make a substantial contribution to the economic growth of the country, besides paying taxes, and therefore deserved support to fulfill their dream of owning a house which is a basic and genuine aspiration. He said incentivisation of affordable housing will boost the real estate sector, resulting in employment generation as well.
The Minister also urged banks and other lending institutions to adopt a proactive approach to take the benefits to middle income groups.
Minister of State for HUPA Rao Inderjit Singh said ‘Housing for All Mission’ is the most important initiative of the government to ensure a decent house for all by 2022. The scheme is initially envisaged for one year. As many as 70 lending institutions, including 45 Housing Finance Companies and 15 scheduled banks, signed a Memoranda of Understanding with the National Housing Bank (NHB) on Wednesday for implementation of the CLSS(MIG) component of the Pradhan Mantri Awas Yojana (Urban).