“Pradhan Mantri Awas Yojana (PMAY).”A boon to Lower middle class and economically weaker Section –


Good news for the First time Property buyers. Our Central Government is giving 2.5% Interest subsidy for the period 15 Years. All you have to know is, if you are married and not yet owned property on your name then you are eligible for this scheme. (Only for EWS and LIG).

The Scheme is called “Pradhan Mantri Awas Yojana (PMAY)”. This scheme is open for two defined sectors called EWS and LIG. Definition is very simple, Economically Weaker Section or EWS means your income not to exceed 3 Lakhs per annum. LIG or Lower income Group is nothing but those people who earn between 3 and 6 Lakhs.

What should I do? Simply buy property/ construct existing plot, apply loan with ICICI bank under PMAY Scheme. You will get subsidy for 6 lakhs for 15 years Tenure @ 2.5% discount.

Confusing? Just simple calculation, You apply for 10 Lakhs loan for 15 years @ ROI 9%. EMI for this would be Rs10,142/-.What happens to your principle outstanding, it start decreasing from 10 Lakhs. Now Central Government will give you 2.5% interest subsidy for 15 Years upfront.

Rs. 6,00,000 X 2.5% X 15 Years = 2,25,000/- approximate. This will be paid to your banker in advance as one shot. Then your outstanding principle will become Rs 7,75,000/- then EMI reduces to Rs7,860/-.

This scheme is aimed to full fill PM Narendra Modi’s dream of “Housing for all by 2022” Vision.

Pradhan Mantri Awas Yojana (PMAY) in Association with ICICI Bank.

What is Pradhan Mantri Awas Yojana (PMAY) Credit Linked Subsidy Scheme?

Credit Linked Subsidy, is a scheme launched by our honourable Prime Minister Shri Narendra Modi for Economically Weaker Section (EWS) and Low Income Group (LIG). The beneficiary would be eligible for interest subsidy on purchase/construction of a house. The scheme is also available for enhancement of a dwelling unit.

Who can avail Credit Linked Subsidy Scheme?

A beneficiary is defined as:

A family comprising of husband, wife and unmarried children

Beneficiary should not own a pucca house either in their name or in the name of any member of their family in any part of India to receive central assistance under the Mission

Meeting income criteria defined under the scheme

What are the income norms for EWS and LIG categories?

The income norms for EWS/LIG categories are defined as follows:

EWS households with an annual income up to Rs. 3 Lakh

LIG households with an annual income between Rs. 3 Lakh to Rs. 6 Lakh

What is the applicable interest subsidy and the loan amount?

Beneficiaries of Economically Weaker section (EWS) and Low Income Group (LIG) seeking housing loans would be eligible for an interest subsidy at the rate of 6.5% for a tenure of 15 years or during tenure of loan whichever is lower on the initial Rs. 6 Lakh. Any additional loan/s beyond Rs. 6 Lakh, will be at nonsubsidised rate.

How will I receive the interest subsidy benefit?

The bank will claim subsidy benefit for eligible borrowers from National Housing Bank (NHB). The NHB will conduct a due diligence to exclude claims where customer has submitted multiple request. For all eligible borrowers, the subsidy amount would be paid to the Bank. Once the bank receives the interest subsidy, it will be credited upfront to the Loan Account. The subsidy will be calculated on NPV basis at the rate of 9% discount rate.

For example, the borrower avails a loan for Rs. 8 Lakh and the subsidy works out to Rs. 2,20,000. The amount (Rs. 2,20,000) would be reduced upfront from the loan (i.e., the loan would reduce to Rs. 5,80,000) and the borrower would pay EMIs on the reduced amount of Rs. 5,80,000.

*The above example is for illustration purpose only and will depend on the actual amount received or any changes done by NHB on the same.

What is the size of dwelling units under Credit Linked Subsidy Scheme?

The Credit Linked Subsidy is available for housing loans availed for new construction and addition of rooms, kitchen, toilet, etc. to existing dwellings as incremental housing. The carpet area of houses being constructed under this component should be up to 30 sq. m. for EWS category and up to 60 sq. m. for LIG category. However, the beneficiary can construct a bigger house.

Where can I apply for Credit Linked Subsidy Scheme (CLSS)?

You can apply for Housing Loan under CLSS at any ICICI Bank branch.

Do I have to give any additional documents to avail this subsidy?

No, there is no additional documents except a Declaration of not owning a pucca house. Customers not having income proof would require to submit an Affidavit.

Is there any loan amount limit on this scheme?

No, there is no loan amount limit under this category of loans.

I have a small business, can I avail Home Loan under this scheme?

Yes, you can avail this facility, if you qualify for the income criteria defined under this scheme.


Pradhan Mantri Awas Yojana is a government subsidy scheme for families buying their first house, though there is no upper Loan Amount and Tenure cap for the scheme, however the subsidy benefit would be available on the initial Rs. 6 Lakh. It would be computed at a rate of interest of 6.5% p.a on a maximum amount of Rs. 6 Lakh or the loan amount whichever is lower for 15 years tenure with discounting rate of 9%. For 6 Lakh the interest subsidy comes to around Rs. 2,20,000. Hence an upfront subsidy of Rs. 2,20,000 would be claimed by the bank from NHB and the same would be adjusted against the outstanding amount in the Loan Account. The loan outstanding would reduce and result in lower EMI of approximately Rs. 2,000.


Thanks ICICI Bank.com

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