29th January – Credit Linked Subsidy Scheme

One of the key schemes through which the Centre has been trying to push demand for affordable housing is the credit linked subsidy scheme (CLSS) which offers an interest subvention on low-ticket housing loans.

What is CLSS?

  • The CLSS is the only scheme under the PMAY (Urban) which is directly implemented by the Centre.
  • Through this scheme, the Centre provides direct subsidy on home loans taken by urban buyers of affordable homes, with incomes below specific thresholds.
  • The benefits are targeted at individuals from economically weaker sections (EWS), the lower income group (LIG) and the middle income group (MIG).

Benefits –

  • Under this scheme, individuals purchasing a new affordable home can get interest concessions of 3-4 per cent on the amount borrowed, subject to some conditions.
  • The subsidy is calculated as the present value of interest savings on home loans over the entire tenure of the loan, capped at a maximum of ₹2.35 lakh.
  • This subsidy is deducted from the principal dues of the borrower, reducing the amount of EMIs payable.
  • For getting the subsidy, the borrower has to submit a self-declaration on the income and title of the property to be acquired, to the lender who verifies these details.

Conditions –

  1. For one, this benefit is available to borrowers in four income segments — MIG I (₹6-12 lakh), MIG II (₹12-18 lakh), LIG (₹3-6 lakh) and EWS (up to ₹3 lakh).
  2. In addition to income levels, the subsidy is subject to carpet area limits on the property at 200 square metres for MIG II, 160 sq.m for MIG I, 60 sq.m for LIG and 30 sq.m for EWS.
  3. The maximum loan on which CLSS can be availed of is ₹12 lakh for MIG II, ₹9 lakh for MIG I, ₹6 lakh for EWS/LIG.
  4. Finally, all houses constructed or purchased under PMAY will need to be the first house owned by the beneficiary.

Challenge –

Though the banks are supposed to give immediate credit to the borrower, the lender gets subsidy amount only after the claim is processed by the nodal agency with which it is registered. Recent reports suggest delays in receipt of subsidy by the lenders, leading to poor interest in promoting it.

SourceThe Hindu Business Line

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