Housing for All – PMAY – Pradhan Mantri Awas Yojna 2019

Pradhan Mantri Awaas Yojana or PMAY is a government of India initiative which aims to provide affordable housing to the urban poor. Launched in 2015, this scheme targets of building around 20 million houses by March 2022. PMAY has two components; PMAY-U and PMAY-G/ PMAY-R. The former stands for Pradhan Mantri Awaas Yojana (Urban) and is for the urban poor. The latter stands for Pradhan Mantri Awaas Yojana (Gramin) and is for the rural poor.

PMAY is converged with other schemes to provide facilities like toilet, LPG connection, electricity connection in the built houses; along with access to drinking water and banking facilities. The houses built under this scheme are constructed through an eco-friendly technology. Preference is given to the senior citizens and differently abled individuals while allotting the ground floors in the housing scheme under Pradhan Mantri awas Yojana. PMAY mission has the following four components:

1. Affordable housing through Credit Linked Subsidy
2. In-situ slum redevelopment with private sector participation using land as a resource
3. Affordable housing in partnership with the public and private sector
4. Beneficiary-led house construction and enhancement.

Affordable housing through Credit Linked Subsidy (CLSS)

The main feature of PMAY is that the Indian government will offer an interest subsidy of 6.5% on housing loans that are availed by the beneficiaries for a period of 20 years under CLSS from the start of the loan. Under CLSS, the interest subsidy is provided for the purchase, construction, improvement or extension of the house to beneficiaries belonging to the following sections:

1. EWS (Economic Weaker Section)
2. LIG (Low Income Group)
3. MIG- I (Middle Income Group-1)
4. MIG- II (Middle Income Group-2)

The table given below displays the eligibility criteria of each section along with other key details of the scheme.

CLSS scheme type
Eligibility household income (Rs.)
Up to 3 lakhs
3 lakhs – 6 lakhs
6 lakhs – 12 lakhs
12 lakhs – 18 lakhs
Interest subsidy (%)
Max subsidy (Rs.)
Subsidy calculated on a max loan of (Rs.)
6 lakhs
6 lakhs
9 lakhs
12 lakhs
Max. carpet area*(sq. m.)
Women ownership
Not mandatory
Not mandatory
Validity of the scheme
31 March 2022
31 March 2022
31 March 2020
31 March 2020

*Carpet area will count as any floor space within the house including the internal partition of the walls, but excluding the external walls.

Features of the scheme

1. It is mandatory to produce the Aadhar number(s) of the beneficiary’s family of the MIG category to avail the subsidy on a home loan.

2. The scheme offers upfront subsidy benefit on the principal outstanding.

3. There is no cap on the cost of the property or the loan amount.

4. The NPV (Net Present Value) of the interest subsidy is calculated at a discount rate of 9%.

5. Interest subsidy is not available for a loan tenure exceeding 20 years.

6. Applicant’s age must be less than 70 years at the end of the repayment tenure.

7. The additional loan beyond the specified limits (if any) will be provided at a non-subsidized rate.

8. For the EWS and LIG categories, the house acquired or constructed through this scheme must be in the name of the female head of the household. It can also be in the joint names of the male head of the household and his wife.

9. The house can be in the name of the male member of the household only if there is no adult female in the family. However, this stipulation is only applicable for the new purchases. It is not applicable for the repairs/ enhancement of an existing house or for new construction on an existing piece of land.

10. A couple cannot avail the scheme separately. Either they have to avail just one or apply jointly.

11. Beneficiaries must choose the location of the house among the approved government listing of towns as per the census of 2011. Even an approved adjacent planning area can be chosen. Potential applicants are advised to keep a tab of the updated lists to find more inclusions.

12. If a beneficiary is unable to repay the loan, then the house will qualify as an NPA (Non-Performing Asset). This gives the lender complete authority to recover the due amount. Procedures for the same might lead to foreclosure of the property.

Eligibility criteria for availing PMAY

The scheme is open to the families consisting of wife, husband, and unmarried children. An adult earning member is treated as a separate household in the MIG category irrespective of his/ her marital status. Apart from the eligibility criteria regarding the household income as mentioned in the table, here are the other basic eligibility criteria for availing the scheme:

1. Beneficiaries should not have received any assistance under PMAY.
2. Beneficiaries should not own a pucca house in their name or in the name of any member of the family in any part of India.
3. Beneficiaries should not be more than 70 years.

Process to avail the subsidy

Private contributors like ICICI Bank, IIFL Home Loans, and AU Housing Finance Limited are helping beneficiaries avail CLSS under PMAY across India. Some of them even provide a home loan emi calculator to help the applicants understand the eligibility and other basic details pertaining to the loan. Here is an example of how to avail the subsidy from ICICI.

1. Fill the form by providing the details of family members correctly. Signature of applicant and co-applicants is required wherever needed on the form.
2. Submit the self-declaration form along with the applicant’s original ID proof to the nearest ICICI Bank asset servicing Branch.
3. Carry original Aadhar card as well of all the family members to avail the subsidy.

The subsidy is subject to the approval and clearance from the National Housing Bank. Applicants are advised to check their eligibility beforehand using the home loan calculator.

Author Since: Jan 17, 2019

Anoop Bansal, a professional Chartered Accountant based in the National Capital - Delhi. I have worked for the top-notch Indian and International banking firms for the past 10 years. Currently, I work at emi-calculator.loan blog and a financial consultant for different SMEs in India. Follow me on Facebook, Twitter and Linkedin for more information.

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