Credit Linked Interest Subsidy Scheme For Middle Income Group – 2017

The interest subsidy scheme announced by Prime Minister of India to fulfill the dreams of middle class income group to have their own house has been named as “Credit Linked Subsidy Scheme for Middle Income group ( CLSS-MIG)”

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The operational guidelines for Credit Linked Subsidy Scheme for Middle Income group have been released on 22nd march by Minister of Housing and Urban Poverty Alleviation Shri M. Venkaiah Naidu

The guidelines are as follows:

  • Middle income group with annual income of above Rs.6lakh and up to Rs.18lakh are eligible for interest subsidy on housing loan under Credit Linked Subsidy Scheme for Middle Income group.

  • Individuals who have been sanctioned housing loans and whose applications are under consideration since 1st January 2017 are also eligible for this subsidy scheme

  • The interest subsidy of 4% on housing loan of up to Rs.9lakh will be given to those MIG who earns an annual income of 12lakh and for those individual who earn Rs.18lakh per year the Interest subsidy is 3% on housing loan of up to Rs.12lakh

  • Families( comprising of wife, husband, unmarried daughters and sons) are also eligible for the interest subsidy under Credit Linked Subsidy Scheme for Middle Income group ( CLSS-MIG)

  • Interest subsidy will be provided on loans for construction/acquisition of house within an area of 90sq.Mtrs for those who earns 12lakh per annum and 110sq.mtrs for those who earns Rs.18lakh per year

  • 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

  • Tenure of the loan has been increased to 20 years which was 15 years before

  • The interest subsidy of 4% under Credit Linked Subsidy Scheme will bring down EMI of beneficiaries by Rs.2,062 per month on housing loan of Rs.9lakh and EMI on interest subsidy of 3% for housing loan of Rs.12lakh will come down by Rs.2,019 per month

  • Beneficiaries eligible for interest subsidy under Credit Linked Subsidy Scheme can directly apply to Primary Lending Institution(PLIs) after due verification of applications will sanction loans and there after claim subsidy from CNAs

  • There will be no processing fee charged by PLIs from the application under CLSS

Primary Lending Institutions include scheduled commercial banks, housing finance companies, small housing banks, state and urban cooperative banks, regional rural banks and NBFC-MFI.

70 lending institution including 45 housing finance companies, 15 scheduled banks, 2 regional rural banks, 1 cooperative bank, 4 small finance banks and 3 non-banking finance companies-micro finance institutions has signed Memorandum of understanding with National Housing Bank for implementation of Credit Linked Subsidy Scheme component of Pradhan Mantri Awas Yojna.

See Below the Table For CLSS-MIG Scheme

The new interest subvention as proposed CLSS-MIG Scheme. Suppose, you have opt for a home loan amount of Rs. 20 lakhs at the interest rate of 8.60% from SBI for 20 years. Now, on this loan amount of Rs. 20 lakhs, you will get an interest subsidy of 4% on the loan amount of Rs. 9 lakhs out of the 20 lakhs loan amount. For the rest amount, you will get an interest subvention of 3% for next loan amount of 3 lakhs out of the 20 lakhs loan amount. The remaining 8 lakhs loan amount will be calculated at normal interest rate of 8.60%.

Interest Calculated @ 4.60% for loan amount of 9 lakhs out of 20 lakhs

Loan Amount Interest Rate Loan Tenure Monthly EMI Total Interest
9,00,000 4.60,% 20 5,743 4,78,210

Interest Calculated @ 5.60% for loan amount of 3 lakhs out of 20 lakhs

Loan Amount Interest Rate Loan Tenure Monthly EMI Total Interest
3,00,000 5.60% 20 2,081 1,99,354

Interest Calculated @ 8.60% for loan amount of 8 lakhs out of 20 lakhs

Loan Amount Interest Rate Loan Tenure Monthly EMI Total Interest
8,00,000 8.60% 20 6,993 8,78,392

Total Interest Outgo & Monthly EMI for 20 years

Loan Amount Loan Tenure Monthly EMI Total Interest
20,00,000(CLSS-MIG) 20 5743+2081+6993=14,817 4,78,210+1,99,354+8,78,392= 15,55,956
20,00,000(Without CLSS-MIG) 20 Rs. 17,483 Rs. 21,95,981

EMI and Interest Rates are Reduced By Rs 2,666 and Rs 6,40,025