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Credit Linked Subsidy Scheme (CLSS)

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In June 2015, under Pradhan Mantri Awas Yojana (PMAY), Ministry of Housing and Urban Poverty Alleviation (MoHUPA) introduced Credit Linked Subsidy Scheme (CLSS) for individuals to own their dream home. This subsidy can be called as interest subsidy scheme under PMAY that is given to people for home construction, purchase, extension and improvement. This scheme is focused to provide subsidy for people who fall in the Economical Weaker Section (EWS), Lower Income Group (LIG) and Middle Income Group (MIG).

CLSS is introduced to promote affordable housing for all. According to PMAY, it is expected to become reality by the end of year 2022. ‘Housing for All’ by 2022 will be a humongous task and the Government has proposed that this initiative will be undertaken by Credit Linked Subsidy Scheme and should be achieved by the end of the year 2022.

The scheme has been designed to provide interest concession to borrowers who are looking to secure a home loan from various lending institutions under Pradhan Mantri Awas Yojana (PMAY). To provide affordable housing finance to individuals, around 70 banking and non-banking institutions that include housing finance companies, small finance banks, regional rural banks and scheduled commercial bank have collaborated with National Housing Bank (NHB). The maximum home loan tenure offered under CLSS is 20 years and subsidy could be availed with the loan amount of maximum upto 6 lakhs.

Several Housing Finance Companies and other related institutions will be eligible for an interest subsidy at the rate of 6.50% for tenure of 20 years or during tenure of loan, whichever is lower.

Let’s take a look at some of the features of CLSS for EWS, LIG and MIG categories in a tabular format: 

CLSS for LIG (Lower Income Group) and EWS (Economically Weaker Section)

Category LIG (Lower Income Group) EWS (Economically Weaker Section)
Annual Income Limit Between Rs. 3 Lakhs – Rs. 6 Lakhs Rs. 3 Lakhs
House Size 60 Sq. Mtr. 30 Sq. Mtr.
Interest Subsidy 6.50% 6.50%
Loan Limit for subsidy Rs. 6 Lakhs Rs. 6 Lakhs
Subsidy’s period 20 yrs or loan tenure, whichever is less 20 yrs or loan tenure, whichever is less
Max. Amount of Subsidy Rs. 2.2 Lakhs Rs. 2.2 Lakhs

Facts and features of CLSS for EWS and LIG:

  • Only if the loan amount is upto Rs 6 lakh, this scheme can be availed
  • Maximum subsidy that can be availed is upto 2.67 lakhs
  • This scheme is only applicable for applicants to buy or construct a house.
  • Any amount above the amount of 6 Lakhs, no subsidy shall be available.
  • The applicants are only eligible if they do not own a ‘pucca’ house either under their own name or under the name of any member of their family, in any part of India.
  • If any beneficiary family has already availed central assistance from Government of India under any housing scheme before, then they will not be able to benefit from the scheme.

CLSS for MIG (Lower Income Group)

Category MIG 1 (Middle Income Group) MIG 2 (Middle Income Group)
Annual Income Limit Between Rs. 6 Lakhs – Rs. 12 Lakhs Between Rs. 12 Lakhs – Rs. 18 Lakhs
House Size 160 Sq. Mtr. 200 Sq. Mtr.
Interest Subsidy 4% 3%
Loan Limit for subsidy Rs. 9 Lakhs Rs. 12 Lakhs
Subsidy’s period 20 yrs or loan tenure, whichever is less 20 yrs or loan tenure, whichever is less

Facts and features of CLSS for MIG (2 Salary Brackets):

  • For MIG – 1stSalary Bracket: Interest subsidy can be availed at 4% on home loans upto Rs. 9 lakhs
  • For MIG – 2nd Salary Bracket: Interest subsidy can be availed at 3% on home loans upto Rs. 12 lakhs
  • Maximum subsidy that can be availed is upto 2.35 lakhs

How to Apply for CLSS

The applicants who are eligible for interest subsidy under CLSS LIG/EWS/MIG have to apply directly to Prime Lending Institutions (PLIs). PLIs after due verification of applications will sanction loans and afterward claim the subsidy from Central Nodal Agencies (CNAs).

Criteria to avail CLSS

CLSS scheme’s beneficiary family shall consist of husband, wife and unmarried children. The applicant or his/her family members should not own a pucca house in his/her or in the name of any member of his/her family in any part of India. Credit linked subsidy would be available for housing loans used for new construction and addition of rooms, kitchens, washrooms etc. to existing homes, as incremental housing. In case of married couples, either of the spouse or both together in joint ownership will be eligible for a single subsidy.

Processing Fees for CLSS

There will be no processing fee charged by PLIs for the applicants applying under CLSS. Therefore, making no hassle for the applicants to plan their EMIs and avail the benefits of this scheme.

Recognized PLIs of CLSS:

NBFCs and small finance banks also have been recognized to function as Primary Lending Institutions to enlarge the scope of execution of CLSS (MIG). Furthermore, institutions like state and urban cooperative banks, housing finance companies, regional rural banks and scheduled commercial banks are also recognized to function as PILs.

Hence, this scheme is a positive initiative under Pradhan Mantri Awas Yojana, as it promises housing for all at the end of 2022. Moreover, it benefits the needy groups of Indian citizens, including Economic Weaker Section and Lower Income Group segments. As many of these people’s dream of owning a house under their own name remains a dream throughout their lives. Therefore, CLSS offers them an attractive scheme to avail and make their dream of owning home come true.

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