Eligibility criteria to get PMAY interest subsidy on Home Loans.

By Abhay Shah, Realty Quarter

There was no proposal from the government to increase the amount provided under the Pradhan Mantri Awas Yojana (PMAY), Narendra Singh Tomar (Minister for rural development, reported the Rajya Sabha on 28 June 2019. “We lately restructured this system, and we supply Rs.1.5 lakhs to build each house. No suggestion has been made at this time to raise the amount, the minister informed the house.

The minister said the government has re-structured the former rural housing scheme Indira Awas Yojana (IAY) in Pradhan Mantri Awas Yojana – Gramin (PMAY-G) under the ministry to attain the goal of ‘Housing for All by 2022.’ From June 25th 2015 a plan has been implemented by the Ministry of Housing and Urban Affairs, which is Pradhan Mantri Awas Yojana – Urban. “The target number of houses to be built under PMAY-G by 2021-22 is 2.95 crores, which is to be achieved in phases, to accomplish the goal of ‘Housing for All’. During the first phase, 1 crore houses were drawn up for development in three years (2016-17 to 2018-19), and in the second phase, in three years (2019-20 to 2021-22) 1.95 crore houses are estimated to be constructed.

Eligibility criteria for availing the subsidy on interest on home loans under PMAY:

The category eligible is split into two components – one is EWS and the other is LIG. This scheme is accessible in the 4,041 statutory towns for the acquisition or construction of housing units as per the 2011 census and 274 extra towns that have been notified separately by the state government.

In order for this subsidy to be granted, the person or spouse must not own an all-weather pucca house, on his/her name or in the name of any unmarried kid of a couple, in any portion of India. A borrower can also use this facility to extend his current house, whether self-acquired or inherited, in addition to acquiring or building a fresh house. If the borrower intends to take benefits of extending or upgrading his current home to add rooms, kitchen, toilet, etc., then the pre-existing condition of a pucca house will not apply.

In addition, the income for qualification under this system shall be the income of the whole family as a unit rather than just of the head of the family. To benefit from the subsidy, the borrower must provide the lender with a self-declaration regarding earnings and title of the property to be purchased. As no portion of the loan granted under the scheme is covered by the government, lenders must follow their own due diligence process, for income and title of the property. The lender has to track the development of the housing units funded by the scheme, such as building design approvals, infrastructure facilities, construction quality etc. The lender must also check the expense incurred up to distinct construction phases through site visits.

Therefore, the Government will only subsidize such credits but the lender must take all other precautions that are required in the context of any other ordinary home loan, as any non-payment or credit that becomes a non-performing asset, will be on the bank’s books.