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Government Rolls Out CLSS MIG Scheme to Encourage Home Ownership

Press Information Bureau Government of India Ministry of Housing and Urban Poverty Alleviation Credit Linked Interest Subsidy scheme for tax paying Middle Classes made effective from January 1 this year Those sanctioned house loans and applied for since January 1steligible for interest subsidy of up to ₹2.35 lakh each Aspirational unmarried earning adults of a family made eligible for subsidy linked 20 year loans Repurchase besides construction of new house permitted Guidelines for CLSS­MIG released by Shri M.Venkaiah Naidu EMI for MIG beneficiaries will come down by over ₹2,000 per month, says NHB Chief Loan tenure of CLSS for EWS and LIG also increased to 20 years from 15 years to enable easy repayment Housing for All mission now covers people with income of up to ₹18 lakh per year in urban areas 70 Lending Institutions sign MoUs with National Housing Bank for implementation of CLSS­MIG.

The window of fulfilling the aspiration of owning a pucca house for the tax paying large middle class population, announced by Prime Minister Shri Narendra Modi in his address to the Nation on December 31 st last year has been made operational from the next day i.e January 1 st this year. This interest subsidy scheme has been named as ‘Credit Linked Subsidy Scheme for Middle Income Groups – CLSS(MIG)’.

Operational Guidelines for CLSS(MIG) to this effect have been released here by Minister of Housing and Urban Poverty Alleviation Shri M.Venkaiah Naidu.

Middle Income Groups (MIG) with annual incomes of above ₹6.00 lakhs and up to ₹18.00 lakhs per year are eligible for interest subsidy on housing loans under the new CLSS(MIG). Those who have been sanctioned housing loans and whose applications are under consideration since January first this year are also eligible for interest subsidy.

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Speaking on the occasion, Shri Naidu said that Middle Income Groups make substantial contribution to the economic growth of the country besides paying taxes and deserved support to fulfill the dream of owning a house which is a basic and genuine aspiration. He further said that large scale incentivisation of affordable housing will boost real estate sector resulting in employment generation as well. He urged the banks and other lending institution to adopt a pro­active approach to reach the benefits to MIG people.

Minister of State for HUPA Rao Inderjit Singh said Housing for All Mission is the most important initiatives of the Government to ensure a decent house for all by 2022.

Since the middle income groups are better equipped to take advantage of the interest subsidy scheme in quick time and to enable meeting the Housing for All target by 2022, implementation of CLSS(MIG) is initially envisaged for one year.

Prime Minister has announced interest subsidy of 4% on housing loans of up to ₹9.00 lakhs of those with an income of ₹12.00 lakh per year and of 3% on housing loans of up to ₹12.00 lakh of those earning ₹18.00 lakh per year.

In the Guidelines for CLSS(MIG), the tenure of loan has been stipulated to be 20 years or that preferred by the beneficiary, whichever is lower. The total interest subsidy accruing on these loan amounts will be paid to the beneficiaries up front in one go there by reducing the burden of Equated Monthly Instalment (EMI). The total interest subsidy to be paid to MIG people on ₹9.00 loan comes to ₹2.35 lakh and on a loan of ₹12.00 lakh, it comes to ₹2.30 lakh per beneficiary.

While defining the beneficiary family as comprising of wife, husband and unmarried daughters and sons, the Guidelines, in an acknowledgement of the aspirations of the youth, have made even unmarried and earning young adults eligible for taking the benefit of interest subsidy under CLSS(MIG), for acquisition/construction of a new house including repurchase.

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Interest subsidy will be provided on loans for construction/acquisition of house with carpet area of 90 sq.metres by those earning ₹12.00 lakh per annum and of 110 sq.mt by those earning ₹18.00 lakh per year.

Under the Guidelines, preference is to be given to women with overriding preference to widows, single working women, persons belonging to Scheduled Castes and Scheduled Tribes, Backward Classes, Differently abled and Transgender people.

Small Finance Banks and Non-Banking Finance Company­Micro 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.

While the new CLSS(MIG) covers people with income of up to ₹12 lakh and ₹18 lakh per year, the CLSS component of PMAY(Urban) launched in June, 2015 and applicable to Economically Weaker Sections (EWS) and Low Income Group (LIG) covers urban poor with income levels of ₹3.00 lakh and ₹6.00 lakh per year respectively. Under CLSS(EWS/LIG), interest subsidy of 6.50% is being provided on a loan of up to ₹6.00 lakh. Tenure of this loan is now increased to 20 years from the earlier 15 years, to enable easy repayments. Total interest subsidy available to each beneficiary under this component is ₹2.30 lakh.

Shri Sriram Kalyanaraman, MD and CEO of National Housing Bank informed that interest subsidy of 4% under CLSS(MIG) will bring down Equated Monthly Installment of beneficiaries by ₹2,062 per month on a housing loan of ₹9.00 lakhand interest subsidy of 3% will bring down EMI by ₹2,019 on a loan of ₹12.00 lakh, taking normal housing loan interest rate as 8.65%. He further said during 2015-­16, against total new bookings of 28.90 lakh units with loans of up to ₹10 lakhs each, Public Sector Banks and Housing Finance Banks advanced loans of ₹9.50 lakh crore and accounted for 64% of total bookings.

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70 lending institutions including 45 Housing Finance Companies, 15 scheduled banks, 2 Regional Rural Banks, 1 Cooperative Bank, 4 Small Finance Banks and 3 Non­Banking Finance Companies­Micro Finance Institutions today signed Memoranda of Understanding with National Housing Bank (NHB) today for implementation of CLSS(MIG) component of PMAY(Urban).

NHB and Housing and Urban Development Corporation(HUDCO) have been designated as Central Nodal Agencies (CAN) for implementation of CLSS for both MIG and EWS/LIG who would reimburse 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 NBFCMFI.

Beneficiaries eligible for interest subsidy under CLSS can directly apply to PLIs and PLIs after due verification of applications will sanction loans and there after claim subsidy from CNAs.

No processing fee will be charged by PLIs from the applicants under CLSS.

Keen to know the savings to be made with CLSS-MIG over normal home loan offer? Look at the two tables below.

Home Loan of 35 Lakhs Under CLSS-MIG (On assumed interest rate of 9% per annum and a tenure of 20 years)

Income Class Loan Quantum Portion Eligible for Interest Subsidy Interest Rate on the Remaining Loan Amount EMITotal InterestOverall Repayment (Principal+Interest)
₹12 Lakhs₹9 Lakhs at 5%₹26 lakhs at 9%₹5,940+23,393=29,333₹5,25,504+30,14,290=35,39,794₹14,25,504+56,14,290=70,39,794
₹18 Lakhs₹12 Lakhs at 6%₹23 Lakhs at 9%₹8,597+20,694=29,291₹8,63,321+26,66,487=35,29,808₹20,63,321+49,66,487=70,29,808

Home Loan of 35 Lakhs Without CLSS-MIG (On assumed interest rate of 9% per annum and a tenure of 20 years)

Loan AmountEMITotal Interest Overall Repayment (Principal+Interest)
35 Lakhs₹31,490₹40,57,698₹75,57,698

The EMI and interest repayments are reduced by ₹2,157-2,199 and ₹5,17,904-5,27,890, respectively.

Source: Press Information Bureau (PIB)