The Pradhan Mantri Awas Yojana (Urban) or PMAY(U) was introduced on 25th June 2015 by the Government of India for ensuring housing for all in urban areas by providing pucca houses to all eligible beneficiaries by the year 2022. This has been implemented in Indore Real Estate projects.
PMAY(U) has made a mandatory provision for the female head of the family to be the owner or co-owner of the house under this Mission. This is a great way of ensuring the social and financial security of the female member of the family.
Eligibility under the Pradhan Mantri Awas Yojana
- To be eligible under the PMAY, A beneficiary family must comprise husband, wife, unmarried sons, and/or unmarried daughters.
- Beneficiary families should not own a pucca house either in his/her name or in the name of any member of his/her family in any part of India.
- A person having a pucca house less than 21 sqm. or 226 sqft. maybe included under the enhancement of his/her existing house.
- An adult earning member irrespective of marital status are also eligible to avail the benefits of this scheme.
Identification and Selection of Beneficiaries under PMAY
The Pradhan Mantri Awas Yojana (Urban) scheme caters mainly to the housing requirements of the urban poor and also of the slum dwellers residing in confined areas of slums with inadequate infrastructure, poor sanitation, and drinking facilities.
Beneficiaries of PMAY(U) mainly include Economically Weaker Section (EWS), Low-income Groups (LIGs), and Middle Income Groups (MIGs). Please refer to the table attached below for more details.
The beneficiaries from the EWS category are eligible for assistance under all the different options in the scheme, whereas, beneficiaries from LIG and MIG categories are only eligible for the Credit Linked Subsidy Scheme (CLSS) under PMAY(U).
To be recognized as a LIG or EWS beneficiary under the Scheme, the applicant is required to submit an affidavit as income proof to the authority.
Ownership of PMAY (Urban) House
For ownership, it is provisioned that house is to be allotted in the name of an adult female member or in joint name and all houses to have a toilet facility, drinking water, and power supply. Preference is given to persons with disabilities, ST/ SC/ OBCs, minorities, and transgenders.
PMAY Subsidy Offers and Benefits
| Particulars | EWS | LIG | MIG-1 | MIG-2 |
|---|---|---|---|---|
| Annual Household income | Up to 3 lakh | 3 to 6 lakh | 6 to 12 lakh | 12 to 18 lakh |
| Interest subsidy rate | 6.50% p.a. | 6.50% p.a. | 4.00% p.a. | 3.00% p.a. |
| Home loan tenure(max) | 20 years | 20 years | 20 years | 20 years |
| Maximum Eligible Home Loan Amount to Qualify for Subsidy | Rs 6 lacs | Rs 6 lacs | Rs 9 lacs | Rs 12 lacs |
| Maximum Dwelling Unit Carpet Area | 30 sqm. | 60 sqm. | 160 sqm. | 200 sqm. |
| Maximum Interest Subsidy Amount | Rs 2.67 lacs | Rs 2.67 lacs | Rs 2.35 lacs | Rs 2.30 lacs |
| The validity of the scheme | 31st March 2022 | 31st March 2022 | 31st March 2020 | 31st March 2020 |
Various schemes under the PMAY (U)
Slum Redevelopment (ISSR): Under Slum redevelopment, Central Assistance of Rs.1 lakh per house is admissible for all houses built for eligible slum dwellers under the component of In-situ Slum Redevelopment (ISSR) using land as a resource with the participation of private developers. The slum rehabilitation grants can be utilized by States/UTs for any of the slum redevelopment projects.
Credit Linked Subsidy Scheme (CLSS): Interest Subsidy up to 2.67 lakh per house is admissible for Beneficiaries of Economically Weaker Section (EWS), Low Income Group (LIG), Middle Income Group (MIG)-I and Middle Income Group (MIG)-II seeking housing loans from Banks, Housing Finance Companies and other such institutions for acquiring/constructing houses. Refer to the table above for more details.
Note: People who are buying plots but not executing any construction activities will not be considered as beneficiaries under the PMAY (U) CLSS category.
Affordable Housing in Partnership (AHP): Central Assistance of Rs.1.5 Lakh per EWS house is provided by Government of India in Real Estate projects of Indore and other parts of the country where at least 35% of the houses in the projects are for EWS category and a single project has at least 250 houses.
Beneficiary-led individual house construction/enhancements (BLC): Under this component, Central Assistance of Rs.1.5 lakh is available to individual eligible families belonging to EWS categories to either construct new houses or enhance existing houses on their own by engaging construction companies in Indore and other urban areas.
If the beneficiary has a pucca house with a carpet area of up to 21 sq. mt. area or a semi-pucca house, lacking in one of the facilities- i.e. room, kitchen, toilet, bath or a combination of these, it may be taken up for enhancement subject to ULB/State ensuring the structural safety of the house and adherence to following conditions:
- The total carpet area after enhancement must not be less than 21 sq. mt and must not be more than 30 sq. mt.
- Enhancement shall mean the addition of a minimum carpet area of 9.0 square meters into the existing house with pucca construction of at least one habitable room or room with kitchen and/or bathroom and/or toilet conforming to NBC norms.
NOTE: Only the EWS category of people is eligible for all schemes under the PMAY (U), whereas, LIG, MIG-1, and MIG-2 are entitled to only the CLSS scheme.
Central Nodal Agencies and their Roles
Ministry of Housing and Urban Affairs, Government of India (MoHUA), has identified Housing and Urban Development Corporation (HUDCO), National Housing Bank (NHB) and State Bank of India (SBI) as Central Nodal Agencies (CNAs) to channelize the loan amount subsidy to the Primary Lending Institutions (PLIs) and for monitoring the progress of Credit Linked Subsidy Scheme (CLSS) vertical. MoHUA may notify other institutions as CNA in the future.
Some important FAQs
- What is the process of crediting the interest subsidy?
The subsidy is released by the Central Nodal Agencies (CNAs) based on the disbursements made by PLIs to the beneficiaries. The subsidy, disbursed by the CNA to the PLI, is credited by the PLI to the borrower’s home loan account upfront by deducting it from the principal loan amount. As a result, the borrower will pay EMI on the remainder of the principal loan amount. E.g. if the borrower avails a loan for Rs. 6.00 lakhs and subsidy thereon works out to approximately Rs. 2.67 lakhs, the amount (Rs. 2.67 lakhs) would be reduced upfront from the loan (i.e., the loan would reduce to Rs. 3.33 lakhs) and the borrower would pay EMIs on the reduced amount of Rs. 3.33 lakhs for the remaining tenure of the loan.
- Who are the Central Nodal Agencies (CNAs) and what is their role in disbursal of subsidy under CLSS to PLIs?
As of now, HUDCO, NHB, and SBI have been identified as CNAs to channelize the credit-linked subsidy to the PLIs and monitor the progress of CLSS. The Ministry may notify other institutions as CNA in the future. - Which are the PLIs through whom this interest subsidy is released or credited?
Primary Lending Institutions such as Scheduled Commercial Banks (SCB), Housing Finance Companies (HFCs), Regional Rural Banks (RRBs), State Cooperative Banks, Urban Cooperative Banks (Scheduled as well as Non-scheduled), Small Finance Banks (as approved by the Reserve Bank of India) and Non-Banking Financial Company-Micro Finance Institutions (NBFC-MFIs) (as registered with Reserve Bank of India) which have signed MoUs with any one of the CNAs.
Note: No Real Estate Developers/ Builders/ Construction contractors (in Indore or any other region) can be a Primary Lending Institution or Central Nodal Agency. So, one needs to be extremely cautious of people posing as such entities and offering such schemes to the public.
- Is there any preferential treatment for beneficiaries proposed for Affordable Housing through Credit Linked Subsidy Scheme?
Yes, Preference under the CLSS is given to Manual Scavengers, Women (with overriding preference to widows), persons belonging to Scheduled Castes/ Scheduled Tribes/ Other Backward Classes, Minorities, Persons with disabilities and Transgenders subject to beneficiaries being from EWS / LIG, MIG -I & II segments as applicable.
- What is the definition of new construction? Does it include:
- Purchase of a new construction house from a builder
- Purchase of a new construction house from a developer
- Resale of a new construction house from the seller
- Self-construction by the borrower on owned land
All four instances mentioned in the question are covered under the definition of new construction and are eligible for a credit-linked subsidy, within the prescribed terms and conditions, as applicable.
- What is the definition of the carpet area?
The area enclosed within the walls, actual area to lay the carpet. This area does not include the thickness of the inner walls. For further understanding of the carpet area concept, one can reach out to a reliable real estate consultant or a reliable real estate builder in Indore.
- Is resale from (builder/seller) allowed under CLSS?
Resale cases would be allowed but it is incumbent upon banks to adopt their due diligence and banking mechanism processes to curtail speculative cases in this scenario.
- Can NRIs be considered under this scheme?
NRIs can be considered provided they are eligible under the Scheme Guidelines and are also in compliance with other GoI/RBI rules, if any, applicable to NRIs.
Author- Sarbojit Dutta
Civil Constructions, Home Interiors & Renovations!
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