Credit Linked Subsidy Scheme or CLSS rolled out to provide interest subsidy for meeting housing needs since its inception is being tweaked to expand its reach to a wider population. On a recent basis, the dwelling or carpet area under the scheme has been increased. For MIG1 and MIG2 the earlier carpet area of upto 90 and 110 square meters has been increased to 120 and upto 150 sq mt.
Launched in the beginning of this year for the middle income group, the scheme covers two segments MIG1 with income in the range of Rs. 6lakhs to Rs. 12 lakhs and the other MIG2 with income from Rs. 12 lakh to Rs. 18 lakh on an annual basis. On borrowing upto Rs. 9 lakhs, MIG-I is offered an interest subsidy of 4 per cent for loans up to 9 lakh, and MIG-II an interest subsidy of 3 per cent for loans up to of 12 lakh. On an individual basis, the scheme shall provide a maximum benefit of Rs. 2.3 to Rs. 2.35 lakh per beneficiary.
How does the scheme works?
The scheme now extended until March 2019 involves the beneficiary, primary lending institutions and central nodal agency.
On the basis of the loan amount being disbursed to the middle income group, central nodal agencies or CNAs that include NHB and HUDCO release the subsidy amount for the PLIs or primary lending institutions. The lender credits the subsidy amount directly to the borrower's account and then he has to pay interest on the remaining principal.
With more of affordable housing supply and the criteria being widened in respect of the carpet area, housing finance will stand to gain.
More loan disbursal as well as the decrease in the average loan ticket size of the various housing finance companies such as HDFC and Gruh Finance signify marked improvement in the affordable housing segment.