Overview of PMAY Subsidy

The Pradhan Mantri Awas Yojana (PMAY) offers interest subsidies on home loans, allowing beneficiaries to purchase or construct homes. Under PMAY, priority is given to economically weaker sections, scheduled castes, and scheduled tribes. The program not only enhances access to housing but also aims to improve living conditions, thereby contributing to overall socio-economic development in urban areas across India.

Keep reading to learn more about this initiative and the possible reasons for a PMAY home loan subsidy not being received.

Top 5 Reasons for Not Receiving PMAY Subsidy On Home Loan

Pradhan Mantri Awas Yojana (PMAY) is a flagship scheme of the Government of India, launched in 2015 under the affordable housing programme for all. It is also known as the Credit Linked Subsidy Scheme (CLSS).

The scheme offers an interest rate subsidy of up to 6.5% over and above all the income tax benefits to a person looking to buy a home for the first time. 
Every person can claim benefits of PMAY subsidy, but there are certain criteria one must fulfil to avail the benefit of the scheme. The following are the top 5 reasons for not receiving a PMAY subsidy on the home loan.

• You or your family already own a house property: The scheme is targeted towards first-time homebuyers or people who don’t own a pucca house. Therefore, one of the reasons for the PMAY home loan subsidy not being received is you or your immediate family member owning a property in any part of the country.
• You are already covered under a different central or state government housing subsidy scheme: The lending institute can reject benefits under the PMAY subsidy scheme if you or your immediate family member have already availed of subsidy on the housing loan under any other housing schemes from central or state governments.
• Your spouse has already availed of the PM Awas Yojana benefits: If you are married and your spouse has already claimed benefits under the PMAY subsidy scheme before, then your application for interest rate subsidy under the said scheme will be rejected.

To avail of a home loan with PM Awas Yojana benefits, it is mandatory to give details of your spouse to the lending institution and also register your spouse's name as a co-applicant for the loan.

• You don’t fall under the income group listed under the PMAY subsidy scheme: As of April 2021, the PMAY scheme allows you to claim subsidy benefits, only if you fall under the following income group:
• Economically Weaker Section (EWS): Annual household income is lower than Rs 3 lakh
• Low Income Group (LIG): Annual household income is between Rs 3 lakh to 6 lakh
• Your property is not covered under the PMAY scheme: The benefits of the PMAY subsidy scheme are only offered on the purchase of a new house and upgrading the existing kutcha or semi-pucca to a pucca house. Therefore, if you claimed a PMAY subsidy for acquiring an old house or for expanding your existing pucca house, this could be why you have not received a PMAY subsidy on your home loan. Also, to avail of the subsidy, the property should have basic amenities like an electricity connection, water supply connection, sanitation, sewerage, and access to a road. And, the property must be located in statutory towns as per the census 2011. The carpet area of such houses constructed for EWS and LIG should be up to 30 square metres and 60 square metres respectively. Under PMAY, the definition of new construction includes:
• Purchasing a newly constructed home from a builder
• Purchasing a newly constructed home from a developer
• Purchasing a newly constructed home from a seller
• Constructing a new house on self-owned land

How to Avail PMAY Subsidy on Home Loan?

PMAY subsidy is channelised through any of the three central nodal agencies (CNAs) appointed by the Govt. of India. The three CNAs include the National Housing Bank (NHB), the Housing and Urban Development Corporation (HUDCO), and the State Bank of India (SBI).

To avail of an interest rate subsidy on a home loan under the PMAY scheme, you need to ensure you avail of a loan from a lender included in the PMAY list. The lender is here referred to as a primary lending institution (PLI).

After availing of a home loan from a PLI, you need to submit a loan subsidy application with relevant documents. Following the verification by the PLI, the loan subsidy application will be forwarded to CNA. The CNA will then assess the application and review the documents again. This process may take between 4 to 6 months. The PLI has no control over this, and the applicant needs to wait for the CNA to give approval.

After receiving the CNA’s approval, the PLI will then extend the benefits to the borrower.
The house should be constructed within 36 months of the disbursal of the interest subsidy amount. On failure to do so, the PLI will recover the amount from the borrower and return it to the CNA.

The PMAY scheme has significantly brought down the cost of purchasing a new home for the economically weaker and lower-income groups in India. Therefore, if you want to avail of the benefits, avoid the common mistakes and fulfil all the eligibility criteria.

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From already owning a property to the property not meeting PMAY eligibility criteria, there can be several reasons for not receiving a PMAY subsidy on home loans. Understanding these reasons is crucial for a successful application.

If you’re exploring finance solutions to purchase your dream home, consider a home loan from SMFG Grihashakti. We offer loans of up to 90%* of the property value at attractive interest rates starting from 10%* per annum. Check your eligibility, prepare the necessary documentation, and apply online to take the first step towards homeownership.