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

By Finserv MARKETS - Aug 23,2019
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What is Credit Linked Subsidy Scheme (CLSS) in Pradhan Mantri Awas Yojana (PMAY)?


The primary objective of the Pradhan Mantri Awas Yojana (PMAY) is to provide affordable housing facilities to the citizens across the country. With the theme of ‘Housing for All by 2022’, the PMAY has proposed to construct 20 million houses to cater to the needs of the financially weaker section of the country. The houses constructed under the PMAY scheme will have all the basic facilities such as electricity, water supply, proper sewage system, sanitation facility, etc.

In order to enable more people realize their dream of owning a property, the Government has introduced the Credit Linked Subsidy Scheme (CLSS) under the Pradhan Mantri Awas Yojana (PMAY).

This PMAY Credit Linked Subsidy Scheme can also be called as the interest subsidy scheme. This CLSS scheme is focused to provide subsidy on home loan interest rate for people who belong to the Economical Weaker Section (EWS), Lower Income Group (LIG) and Middle Income Group (MIG).

Let’s understand some of the features of Credit-Linked Subsidy Scheme (CLSS) for EWS, LIG and MIG categories in a tabular format:

Credit Linked Subsidy Scheme for LIG (Lower Income Group) and EWS (Economically Weaker Section)

Category Lower Income Group Economically Weaker Section
Annual household income Between Rs. 3 Lakhs – Rs. 6 Lakhs Rs. 3 Lakhs
Carpet area of the dwelling unit 60 Sq. Mtr. 30 Sq. Mtr.
Rate of interest subsidy 6.50% 6.50%
Maximum loan amount Rs. 6 Lakhs Rs. 6 Lakhs
Maximum loan tenure 20 years 20 years

Credit Linked Subsidy Scheme for MIG (Middle Income Group)

Category Middle Income Group- 1 Middle Income Group-2
Annual household income Between Rs. 6 Lakhs – Rs. 12 Lakhs Between Rs. 12 Lakhs – Rs. 18 Lakhs
Carpet area of the dwelling unit 160 Sq. Mtr. 200 Sq. Mtr.
Rate of interest subsidy 4% 3%
Maximum loan amount Rs. 9 Lakhs Rs. 12 Lakhs
Maximum loan tenure 20 years 20 years

Eligibility criteria for Credit Linked Subsidy

  • It is to be noted that the applicants are eligible for PMAY CLSS scheme only if they do not have a house registered under their own name or under the name of any member of their family members.
  • Also, if any family member of the applicant has already availed central assistance from the Government of India under any housing scheme before, they won’t be eligible to benefit from this scheme.
  • In the case of married couples, either of the spouse or both together in joint ownership will qualify for a single subsidy.
  • Credit linked subsidy is applicable for housing loans used for new construction or for the expansion of an already existing property.

Application process and processing fee for CLSS

  • The eligible beneficiaries under Credit Linked Subsidy Scheme  LIG/EWS/MIG can directly apply for a housing loan with the lending institutions.
  • Post the verification of the application, the lending institutions will sanction the home loan and afterward claim the subsidy from Central Nodal Agencies (CNAs).
  • This subsidy amount will be credited to the beneficiaries account by the lending institution. This will lower the total loan amount.
  • The beneficiaries can continue paying the EMIs towards the balance loan amount.
  • Another major advantage is that there will be no processing fee charged by PLIs for the applicants applying under CLSS.

To extend the reach of the CLSS scheme, NBFCs and other small finance banks have been recognized to function as Primary Lending Institution (PILs). Moreover, institutions like state and urban cooperative banks, housing finance companies, regional rural banks, and scheduled commercial banks are also recognized to function as PILs.

To sum it up, the Credit Linked Subsidy  scheme is a great initiative under Pradhan Mantri Awas Yojana, as it promises housing for all, by the end of 2022. CLSS offers attractive schemes to financially deprived individuals to help them realize their dream of purchasing their own property.

It is recommended that beneficiaries under the PMAY scheme should avail a home loan after comparing various loan offers provided by different financial institutions. This will help them avail a home loan that best suits their needs.

Moreover, it is also advisable to calculate the monthly installments of the home loan beforehand with the help of an online housing loan EMI calculator. This can help the borrowers plan their monthly budget wisely and make timely repayment on their home loan.

The Bajaj Finserv Home Loan offers competitive interest rates and other lucrative features such as flexible repayment options, no hidden charges, etc. You can now download and install our home loan app for an easy online application process, minimal documentation and best home loan interest rates among other added advantages.

Lastly, do not forget to read the terms and conditions of the home loan agreement carefully before signing it. This will help you avoid any inconvenience in the later stage.

So what are you waiting for? Check your eligibility under the PM Awas Yojana and take the first step towards purchasing your dream house, today.

You can get to know the about the perfect credit score for home loan and check your eligibility for home loan with the help of housing loan eligibility calculator.

Read more about Government Housing Schemes

Also know about the PMAY Subsidy, PMAY list and PMAY eligibility calculator

Also read about home loan for government employees

Also read about TNHB scheme

Steps to Avail the PMAY Subsidy Scheme

Follow the given steps to avail the PMAY subsidy scheme:

Step 1:

Ensure that you are eligible to apply for the PMAY subsidy scheme against your home loan credit. You can contact Finserv MARKETS’ representatives to have your documents reviewed and check if you can avail of the scheme.

Step 2:

Next, fill in the PMAY Home Loan Credit-Linked Subsidy Application form. Submit the form to your lender with all the other supporting documents.

Step 3:

Once the documents are verified, the loan amount is disbursed into your bank account in a few days.

Step 4:

Once the home loan is disbursed, we will get in touch with the nodal agencies to initiate the process of claiming the subsidy.

Step 5:

The complete application approval will ensure that the subsidy amount is credited to your loan account. This will help lower your Equated Monthly Installments (EMI) when repaying your home loan.

Credit-Linked Subsidy Scheme: Key Factors to Note

Some of the key factors to note about the Credit-Linked Subsidy Scheme include:

  • Credit-Linked Subsidy Scheme (CLSS) is a subsidy that is granted under the Pradhan Mantri Awas Yojana. It offers an interest subsidy on home loans intending to encourage home buyers belonging to the Lower-income groups, Middle-income groups and Economically weaker sections of the society. It effectively lowers the EMI costs by 2,000 per month.

  • Credit-Linked Subsidy Scheme came into effect from January 7, 2017. The interest subsidy can be availed by beneficiaries whose loan applications were processed or sanctioned since the beginning of the given year.
  • There are two sets of beneficiaries listed under the Middle-Income group. The first set of the MIG-I covers individuals who have an annual income of 6 Lakhs to 12 Lakhs per annum (p.a.). The second, i.e MIG-II covers people who have an income of anywhere from 12 Lakhs to 18 Lakhs p.a.
  • The maximum loan amount that can be availed is 9 Lakhs for individuals under the MIG-I category and 12 Lakhs for people under the MIG-II category.
  • The PMAY Urban Scheme is implemented by over 70 lending institutions in the country. This number includes a total of 45 Housing Finance Companies and 15 scheduled commercial banks.

  • The interest rate subsidy applied through the scheme is credited into the loan account at the initial stage of the loan disbursal process. This lowers the monthly EMI costs on the repayment of the loan.

  • Women, disabled persons, Scheduled Tribes, Scheduled Castes, transgenders, and other minority groups are given preference under this scheme.
  • The eligible beneficiary or his/her immediate family members cannot own a ‘pucca’ home in any part of the country.


  • Is there a loan limit applied when availing the PMAY subsidy scheme?

No, there is no loan limit on the amount when availing the PMAY subsidy scheme. However, the maximum amount that can be availed in the subsidy is 6 Lakhs only.

  • Who is eligible for the PMAY subsidy scheme?

The PMAY subsidy scheme can be availed by any beneficiary who does not own a family home in any part of India. The eligibility is also subject to income criteria.

  • Is the interest rate on the Pradhan Mantri Awas Yojana fixed?

Yes, the interest rate on PMAY is fixed at 6.5 percent for 15 years.

  • Can a resident of rural India avail the PMAY-U subsidy?

No, persons residing in rural parts of India cannot avail the PMAY-U subsidy.

  • Is the PMAY scheme open for non-resident Indians (NRIs)?

Yes, the PMAY scheme can be availed by non-resident Indians.

  • Which are the banks that offer the Credit-Linked Subsidy?

The credit-linked subsidy is offered by all the banks listed under the Reserve Bank of India.

  • Are there additional documents required to submit when availing the PMAY scheme?

No, as a beneficiary, you are required to submit a self-declaration form with your signature stating that you do not own a pucca home anywhere in the country.

  • What happens in case the construction of the stated home is left incomplete?

In such a case, the subsidy amount is recovered by the lender and refunded to the Central Government of India, i.e. directed back to the authority’s fund.

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