Pradhan Mantri Awas Yojana: Housing for All - Urban Credit Linked Subsidy Scheme Overview

Pradhan Mantri Awas Yojana Housing for All (Urban) Credit Linked Subsidy Scheme (CLSS) Presentation by Housing & Urban Development Corporation Ltd. (HUDCO) A Central Nodal Agency (CNA) (appointed by Ministry of HUPA)

Pradhan Mantri Awas Yojana (PMAY) Pradhan Mantri Awas Yojana (PMAY) By Hon ble Prime Minister on 25th June 2015 LAUNCHING PURPOSE To provide Housing for All by 2022, total 20 million units are required DURATION 2015-2022 (effective from 17.06.2015/ to be implemented upto 31.03.2022) COVERAGE All 4041 Statutory Towns with focus on Class-I Cities in 3 phases initially BENEFICIARIES EWS & LIG categories having income of Rs.3 Lakh and Rs.6 Lakh p.a. respectively. - Beneficiary should not have any pucca house anywhere in India to be eligible - The house should be in the name of female head of the household or in joint name of the male head & his wife ( in cases there is no adult female member, house can be in the name of male member) - Inclusion of cities/ additional cities in various phases - Project approval at State level - Decide a cut off date for eligibility of beneficiary, the beneficiary needs to be resident of that urban area - Size of EWS House 30 Sq.mt. and LIG House 60 Sq.mt., States to have flexibility but Central assistance is fixed OWNERSHIP OF HOUSE FREEDOM & FLEXIBILITY TO STATE GOVT.

Pradhan Mantri Awas Yojana (PMAY) Componenets In-situ Redevelopment (Slum) Using land as a resource Affordable Housing through Credit Linked Subsidy Scheme (CLSS) Affordable Housing in Partnership Subsidy for beneficiary-led individual house construction Interest subvention subsidy for EWS and LIG for new house or housing For individuals of EWS category for new house or enhancement With private sector or public sector including Parastatal agencies incremental With Private Participation EWS Annual Household income upto Rs.3 Lakh and House size upto 30 sq.m LIG - Annual Household Income Between Rs.3-6 Lakh and House size upto 60 sq.mtrs State to prepare a separate Integrated project for such beneficiaries Central Assistance of Rs.1.50 Lakh per EWS house in affordable housing projects where 35% of constructed houses are for EWS category Extra TDR/FAR if required to make projects financially viable FSI / No isolated / splintered beneficiary to be covered GoI Rs.1.00 Lakh per house grant of Upfront Interest Subsidy @6.5% p.a. for maximum loan amount of Rs.6 Lakh for EWS/LIG Central assistance of Rs.1.50 Lakh per beneficiary For acquisition, construction & incremental construction of house

Credit Linked Subsidy Scheme (CLSS) ROLE OF HUDCO AS CENTRAL NODAL AGENCY (CNA)

CLSS: Beneficiary Credit Linked Subsidy Scheme (CLSS) Eligibility Criteria PURPOSE OF LOAN Acquisition/New Construction of Dwelling Unit/ Addition of Rooms, Kitchen, Toilet etc.(All house built or expanded under the Mission shall essentially have toilet facility.) EWS: Annual Income upto Rs. 3 Lakh LIG: Annual Income between Rs. 3-6 Lakh EWS upto 30 Sq.mt. & LIG upto 60 Sq.mt. States can determine area of EWS as per their local needs with information to Ministry of Housing & Urban Poverty Alleviation (MoHUPA) INCOME ELIGIBILITY CARPET AREA PROOF OF INCOME Self-Certificate/ Affidavit from loan applicant PREFERENCE OF BENEFICIARIES Manual Scavengers/ Women (overriding preference to Widows)/ SC/ST/OBC/ Minorities/ Persons with disabilities/ Transgender, subject to them being EWS/LIG BENEFICIARY IDENTIFICATION REQUIRED Aadhar/Voter Card/Any Other Unique Identification / Certificate of House Ownership from Revenue Authority

CLSS: Beneficiary Credit Linked Subsidy Scheme (CLSS) Eligibility Criteria INTEREST SUBSIDY 6.5% p.a. for loan amount upto Rs.6 Lakh on NPV basis MAXIMUM LOAN ELIGIBLE FOR INTEREST SUBSIDY Rs.6 Lakh. However, a Beneficiary can construct larger DU with additional cost/ loan, but Interest Subsidy will be limited to Rs. 6 Lakh loan only. LOAN PERIOD 15 Years maximum (Tenure may be more than 15 years as per due diligence norm of PLI, but interest subsidy to be restricted on loans upto Rs. 6 Lakh for tenure not more than 15 years) NET PRESENT VALUE (NPV) @9% p.a. for loan amount of Rs.6 Lakh i.e. around Rs.2.30 Lakh on loan tenure of 15 years. CREDIT OF SUBSIDY Will be credited upfront to beneficiary loan A/c resulting in reduced effective housing loan & reduced EMI ADDITIONAL LOAN Loan beyond Rs. 6 Lakh, will be at non-subsidized rate. OWNERSHIP OF HOUSE The houses constructed/ acquired under the Mission should be in the name of the female head of the household or in joint name of the male head and his wife.

Primary Lending Institution (PLI) Role (Banks/HFCs/Co-Operative Banks/RRBs etc.) ROLE WITH HUDCO ROLE WITH INDIVIDUAL Registering with HUDCO (by signing the MoU) Receiving Home Loan Application ( Incl. Master Data, either directly or through ULB/Agency identified by State/ULB) Flagging & Submitting the Claim along with Master Data Processing for Identification (Linking, identification to Aadhar, Voter card, any other unique identification no. and a certificate of house ownership from Revenue Authority of individual and native district to avoid duplication Claiming Subsidy From HUDCO PLI Informing Beneficiary (about her/his eligibility under CLSS) Undertaking Due diligence and Appraisal processes PLI Crediting Upfront Subsidy to beneficiary s A/c Processing Claim for Eligible Applicant without taking processing charge from the Applicant and obtaining Rs. 1000/- per sanctioned application from HUDCO Furnishing Utilization Certificate to CNA Maintenance of CLSS Beneficiary Documents (for verification during inspection, if required) Facilitation Charges of Rs.250/- per sanctioned application to NGO/ULB through States/UTs

Role of HUDCO as Central Nodal Agency (CNA) Channelize the Credit Linked subsidy to the Primary Lending Institutions i.e. Scheduled Commercial Banks Housing Finance Companies Regional Rural Banks State Cooperative Banks Urban Cooperative Banks Any other institutions as may be identified by the MoHUPA Monitor the progress of CLSS Provide periodic monitoring inputs to MoHUPA through regular monthly and quarterly reports One PLI can execute MoU with one CNA only. Role with Primary Lending Institution Disbursing Subsidy to PLI (on claims of total loans- Max 4 installments) Sensitizing PLI Execution of MOU with PLI Post Disbursement follow up steps involved (i) Obtaining Utilization Certificate (ii) Undertaking inspection (if required) Processing of claim received from PLI. Steps Involved (i) Receipt of Claim in electronic/ physical form (ii) Receipt of Master Data in electronic/physical form (iii) Processing of Claim Information & Document Mgt: and Preparation of Reports Submission of Reports to MoHUPA

Credit Linked Subsidy Scheme (CLSS) Special Features DUPLICATION State/UTs/ULBs/PLIs shall link beneficiary identification to Aadhaar, Voter card, any other unique identification or a certificate of house ownership from Revenue Authority of Beneficiary s native district to avoid duplication. STATE LEVEL NODAL AGENCY (SLNA) To be designated by State Govts./UTs to facilitate identified eligible beneficiaries to get approvals/ documents. SWITCHING BETWEEN SCHEMES In case a borrower who has taken a housing loan and availed of interest subvention under the scheme but later on switches to another PLI for balance transfer, such beneficiary will not be eligible or claim the benefit of interest subvention again. Under the Mission, beneficiary can take advantage under one component only .

Credit Linked Subsidy Scheme (CLSS) Special Features Committee of Secretary (HUPA) and Secretary (DFS) in Government of India constituted for monitoring the CLSS including suggesting improvements for achieving the objectives etc. PLIs can send their feedback/suggestions regularly to HUDCO on the issues being faced during implementation of the CLSS. HUDCO would take up with the Concerned Authorities, including the Committees constituted for the purpose, Central Government, RBI, State / UT Governments, etc. for successful implementation of the CLSS.

Pradhan mantri Awas Yojna Subsidy Calculation 15 YEARS No of units Loan Amt-Rs ROI Term (mths) EMI (Rs.) Revised EMI (after adj of NPV)- Rs Difference Rate of Int Subsidy Subsidy per borrower - Rs NPV of Interest subsidy - Rs 1 600000 9.75% * 180 6357 3,907.44 2,449.56 6.50% 3,62,617.47 2,31,151.52 *Interest rates are Illustrative

Amendments since its launch Clause 6 and 8 of the MoU, has now been amended as follows: The PLI shall submit a consolidated utilization certificate on completion of the housing unit within one year period from the start of construction. The PLI shall submit a consolidated utilization certificate on completion of the housing unit within one year period from the completion of construction or a maximum of 36 months from the date of the disbursement of the 1st installment of the loan amount. In case of recoveries in NPA A/Cs, the amount of the recoveries will be first charged to the subsidy amount (balance period of the loan) and will be paid by the PLI to the nodal agency for onward payments/ adjustment as decided by the MoHUPA, Government of India from time to time. In all such cases, the amount of the recoveries will be charged to the subsidy amount on a proportionate basis (in proportion to the loan outstanding and subsidy disbursed).

Frequently Asked Question (FAQ) Question Answer Who is defined as a beneficiary under Housing for All? A beneficiary is defined as a family comprising of husband, wife and unmarried children. Such beneficiary 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 to receive central assistance under the Mission. EWS category of beneficiaries is eligible for assistance in all four verticals of the Missions whereas LIG category is eligible under only CLSS component of the Mission. How is a house defined as a EWS or LIG House? A house is defined as an all-weather single unit or a unit in a multi- storeyed super structure having carpet area of upto 30 sq. m. for EWS category and upto 60 sqm. for LIG category with adequate basic civic services and infrastructure services like toilet, water, electricity, etc. What is the definition of carpet area? Area enclosed within the walls, actual area to lay the carpet. This area does not include the thickness of the inner walls. Whether state has the flexibility to fix the area for house under EWS/LIG category? States/UTs will have flexibility in terms of determining the size of house and other facilities at the state level in consultation with the Ministry but without any enhanced financial assistance from Centre.

Frequently Asked Question (FAQ) Question Answer What is Affordable Housing through Credit Linked Subsidy? Under Credit Linked Subsidy, beneficiaries of Economically Weaker section (EWS) and Low Income Group (LIG) can seek housing loans from Banks, Housing Finance Companies and other such institutions for new construction and enhancement to existing dwellings as incremental housing. The credit linked subsidy will be available only for loan amounts upto Rs 6 lakhs and such loans would be eligible for an interest subsidy at the rate of 6.5 % for tenure of 15 years or during tenure of loan whichever is lower. The Net Present Value (NPV) of the interest subsidy will be calculated at a discount rate of 9%. Any additional loans beyond Rs. 6 Lakh, will be at nonsubsidized rate. Interest subsidy will be credited upfront to the loan account of beneficiaries through lending institutions resulting in reduced effective housing loan and Equated Monthly Instalment (EMI). What is the process of crediting the interest subsidy? The subsidy would be released by the CNAs based on the disbursements made by PLIs to the beneficiaries. Subsidy, so disbursed by the CNA to the PLI, will be credited by the PLI to the borrower s 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., the borrower avails a loan for Rs. 6.00 Lakh and subsidy thereon works out to around Rs.2.20 Lakh, which will be reduced upfront from the loan (i.e., the loan would reduce to Rs. 3.80 Lakh) and the borrower would pay EMIs on the reduced amount of Rs. 3.80 Lakh.

Frequently Asked Question (FAQ) Question Answer What is role of State/ UTs/ ULBs for Affordable Housing through Credit Linked Subsidy scheme? Role of States/UTs/ULBs under this component would be as under: State/UTs/ULBs/PLIs shall link beneficiary identification to Aadhaar, Voter card, any other unique identification or a certificate of house ownership from Revenue Authority of Beneficiary s native district to avoid duplication. State Level Nodal Agency (SLNA) identified by State/UT for implementing the mission will facilitate the identified eligible beneficiaries in getting approvals and documents, etc. to avail of Credit Linked Subsidy. Who are the PLIs through whom this subsidy will be released or credited? Lending Institutions, like banks, HFCs, MFIs etc. who have signed MoUs with any one of the Central Nodal Agencies (CNAs), will be the PLIs, who will operate the Scheme. Whether PLIs need to enter into any MoUs with CNAs for claiming subsidies? Yes, PLIs need to enter into MoUs with one of the CNAs so as to claim benefit under CLSS. How subsidy will be disbursed to the CNAs? An advance subsidy will be released to each CNA at the start of the scheme. Subsequent amounts of credit linked subsidy will be released to the CNAs after 70 % utilization of earlier amounts, on quarterly basis, and based on claims raised by CNAs.

Frequently Asked Question (FAQ) Question Answer What happens where a beneficiary having availed housing loans from one of the PLIs and also benefit under CLSS, switches over to another PLI for taking advantage of the reduced interest rate? A beneficiary who has taken a housing loan and availed of interest subvention under the scheme but later on switches to another PLI for balance transfer will not be eligible or claim the benefit of interest subvention again. Beneficiary can claim interest linked subsidy on only one loan account. How the subsidy is to be released to beneficiaries? The subsidy would be disbursed to the beneficiaries 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. What happens when the subsidy has already been disbursed, but due to certain reasons, the construction of the house is stalled? In such cases, the subsidy is to be recovered and refunded to the Central Government. Can we get 30 year home loan for EWS beneficiary? Yes, beneficiaries can apply for sanction of home loan for tenure of 30 years, which would depend on the due diligence norms of the PLIs concerned. In such cases, however, the interest subsidy would be restricted on home loans upto Rs. 6 Lakh for tenure not more than 15 years.

Thank you Thank you Presentation by Shri HT Suresh, Regional Chief, Bengaluru