Housing for All - The Pradhan Mantri Awas Yojana

A Vision to make housing, affordable

More than half the world's population now reside in cities, and with cities getting more congested, the pressure on building homes for the urban poor and the middle-income groups is like never before.

The Pradhan Mantri Awas Yojana (PMAY) scheme is part of the government's 'Housing for All' initiative and was launched in the year 2015. The aim of this initiative is to provide affordable housing to the urban poor and a lofty goal to build 20 million houses by the year 2022 which would eventually ease the pressure on Indian cities.

Making Indians More Credit Worthy

The PMAY has been framed with the first-time home buyer with low salaries in mind which means that this would be their first step towards credit or their first experience in getting a loan.

A boon for the urban poor and middle-income segment as they would not only fulfill their dream of owning a house but also receive credit from formal banking institutions which would have otherwise been difficult. An applicant can claim interest subsidy of up to 4 per cent on housing loans depending on your annual income and the housing loan amount.

Public Private Partnership

This scheme has been extended to private land owners and builders through public -private partnership to increase its scope and with the vision of helping more Indians.

Construction companies who are working with the government to promote affordable housing are also likely to receive benefits like increased floor area ratio and reduced stamp duty.  The public-private partnership will simplify the land allocation and quicken the pace of construction.

There is also hope that support infrastructure in areas where the scheme is implemented will act as a follow through to create jobs and bring in more investment.

The specifics of this scheme are as follows:

Highlights of the Pradhan Mantri Awas Yojana (PMAY)

•    Eligible applicants are those having an income of Rs. 6 lakhs per annum up to Rs. 18 lakhs per annum on housing loans of up to Rs. 12 lakhs.

•    In order to avail the benefit of interest subsidy under the CLSS (Credit Linked Subsidy Scheme), eligible customers must apply to their lenders directly.

•    The tenure of the loans has been increased from 15 years to 20 years.

•    Only those Home loans sanctioned or applications that are under consideration since January 1, 2017, are eligible for interest subsidy under this scheme.

•    The applicant should not own a house in his/her name. the scheme is valid only for first-time home buyers.

•    The total interest subsidy accruing on these loan amounts will be paid to the beneficiaries up front. This would help in reducing the EMI outgo of the applicant.

•    For those withdrawing an income of Rs. 12 lakhs per annum, and for a housing loan of up to 9 lakhs, the subsidy will be capped at 4 percent. For those withdrawing a salary of Rs. 18 lakhs per annum, having housing loans of up to Rs.12 lakhs the interest subsidy will be of 3 per cent.

•    Eligible finance entities under this scheme besides commercial banks and housing finance companies are regional rural banks, state and urban cooperative banks, other financial institutions like small finance banks and non-banking finance companies.

This scheme has brought a revolution in the housing loan sector for those falling under the middle-income group, a chance to live in a home of their own and at that which is affordable.  

One of the indications of the acceptance of this scheme is the reported increase by 43% in home loans for homes costing under INR 10 Lakh and numerous state funded initiatives that have been announced to aid this scheme. This momentum needs to be sustained and procedural roadblocks need to be removed if the Government wishes to fulfill one of its biggest goals of housing for all.