Credit Linked Subsidy Scheme (CLSS)

In 2015, the Government of India launched a scheme known as the Pradhan Mantri Awas Yojana. The aim of the individuals who are at the helm of this housing scheme is to help the financially underprivileged sections of the Indian populace get affordable housing in urban areas. As a part of the scheme, the relevant officials intend on providing prospective borrowers the financial means that will be necessary for the purpose of purchasing a home through a home loan that will be made available to them on subsidised interest rates.

One of the components of the same is the Credit Linked Subsidy Scheme (CLSS), under which the economically weaker sections and middle-income groups of India can avail home loans at heavily subsidised EMI amounts. Let us now take a deep dive into the concept of the CLSS itself.

The Pradhan Mantri Awas Yojana Credit Linked Subsidy Scheme (Or the PMAY CLSS scheme) is a scheme that was introduced by the Central Government. Under this particular housing loan subsidy program, one can avail an Interest subsidy on the first home loan that an Indian citizen will take for the purpose of construction, purchase, renovation or extension of the house. It essentially is credited upfront and can be as high as up to 6.5%, which is deducted from the loan amount for a tenor of 20 years at the most.

In order to avail the benefits of the government-run Credit Linked Subsidy Scheme, one must make sure that they satisfy the eligibility criteria that has been laid out by the concerned officials. They are as follows:

• One can avail a home loan subsidy only if they are borrowing a housing loan in their name for the first time ever.

• If the applicant has availed the benefits of any of the Government-run housing scheme in the past, they are not eligible for a PMAY home loan subsidy

• The Housing Loan can be availed by any Indian citizen, including women.

• In the case of married couples, either the spouse or both the people will only get a single subsidy, even if the home is owned jointly.

• The subsidy which can be availed differs from individual to individual as it is based on their income level.

The Interest Subsidy which is provided under the CLSS scheme is credited upfront to the loan amount, which is then deducted from the amount for the purpose of calculating the EMI.

Let us take a look at this particular example in order to understand it better: Imagine that you have availed a home loan amount of ₹12 Lakh that attracts 9% per annum rate of Interest. This makes the home loan EMI to ₹ 10,796. If you are eligible for a ₹2.30 Lakh at the most, the loan amount after accounting for the same will be ₹12 Lakh-₹2.30 Lakh, which is ₹ 9,70,000. The figure that you have arrived on will be considered to be your outstanding principal loan amount and the same will have to be repaid with 9% interest rate during the course of the loan repayment tenor.

• The eligible beneficiaries underCredit Linked Subsidy Scheme LIG/EWS/MIG can directly apply for a housing loan with the lending institutions.

• Post the verification of the application, the lending institutions will sanction the home loan and afterward claim the subsidy from Central Nodal Agencies (CNAs).

• This subsidy amount will be credited to the beneficiaries account by the lending institution. This will lower the total loan amount.

• The beneficiaries can continue paying the EMIs towards the balance loan amount.

• Another major advantage is that there will be no processing fee charged by PLIs for the applicants applying under CLSS.

One must always be cognizant of some of the key characteristics of the PMAY scheme before even considering applying for the same. They are as follows:

• It was introduced by the Government in 2015 so that they can provide Pucca houses to 20 million households by the end of the financial year 2022 at affordable rates.

• Under the scheme, one can avail a home loan subsidy of up to 6.5% per annum.

• In order to avail the CLSS subsidy, the applicant must be a first-time borrower of a home loan.

• Under the scheme, there is zero cap on the maximum loan amount that one can apply for.

• If the loan amount that one applies for is beyond the limits that have been specified, the interest rate for an additional loan amount will be calculated at regular home loan rates.

One can always get in touch with the CLSS toll-free helpline numbers if they have any queries, concerns or apprehensions with regards to the CLSS component. The contact numbers for the same are as follows.

• Housing and Development Corporation (HUDCO) (1800-11-6163).

• National Housing Bank (NHB) (1800-113-377,1800-113-388).

The PMAY-Gramin scheme was extended till March 2024 by the Union Cabinet. A similar extension was sought by the NBFCs (Non-banking Financial Companies) on the PMAY-CLSS. This has been extended up to December 2024.