The Indian government has launched the Rajiv Rinn Yojana under the Ministry of Housing and Urban Poverty Alleviation (MHUPA). This is a Central Sector Scheme aimed at meeting the housing needs of the Economically Weaker Sections (EWS) and Low Income Groups (LIG) segments in urban regions. Under this strategy, the government ensures that a conducive environment for credit flow to the housing industry is created, with the goal of promoting homeownership in the country.
Objectives
The Rajiv Rinn Yojana (RRY) has the following goals:
- To direct institutional credit flow to the underprivileged.
- To boost homeownership and address the country’s housing deficit.
- To increase the affordability of mortgages.
- To prevent the spread of slums and squatter colonies.
- Making financing available to urban poor households through the network of banks and Housing Finance Companies (HFCs).
- To increase private investment in the housing industry in order to achieve demand-led growth in the housing stock.
Purpose
The RRY Scheme’s goal is to give a home loan with a Central Government interest subsidy to EWS and LIG individuals who do not own a home in the name of themselves, their spouse, or any dependent child. This scheme envisions the supply of a fixed interest subsidy of 5% on the interest charged on the acceptable loan amount for the purchase or construction of a new dwelling or improvements to an existing building. The RRY project has expanded its scope, breadth, and intended impact in balancing the housing demands of the targeted metropolitan society. The overall aim is defined and communicated to the relevant departments on a regular basis, with the target for the current plan period being 1 million or 10 lakh persons across the country, including slum and non-slum dwellers.
Eligibility criteria
The EWS economic criterion is defined as households with an average annual income of up to INR 1 lakh are eligible under this scheme.
- The LIG’s economic parameter is defined as households with an annual income ranging from INR 1 lakh to INR 2 lakhs.
- This scheme will cover an individual who owns land/property in any metropolitan region but does not possess a pucca home in his name, the name of his spouse or the name of any dependent kid.
- The scheme’s aid amount would also be accessible to EWS and LIG beneficiaries with fewer than 40 sq. m who seek to construct modifications to their current housing units by extending them.
- Women, SC/STs, minorities, and those with impairments will be prioritised under this system. Individuals and Group Housing debtors, on the other hand, are both equally eligible under the scheme.
Terms for application
The subsidy will be 5% per year on the interest charged on the loan amount that is eligible for the EWS and LIG. The subsidy will be distributed as follows:
- Housing Finance Companies (HFCs) and Scheduled Commercial Banks will enter into an MOU with any of the Central Nodal Agencies based on the agreed-upon target number of beneficiaries that the bank and HFC will serve.
- The loans will be sanctioned by the Primary Lending Institutions (PLIs) following due diligence, and the loan amount will be disbursed in accordance with the borrower’s needs.
- Beneficiaries will be charged an interest rate of 5% (basis points of 500) above the PLI’s current rate of interest. The interest subsidy cost will be deducted from the borrower’s Equated Monthly Installment (EMI) and the net EMI will be debited by the Primary Lending Institutions.
Subsidy Reimbursement
Once the qualified loan is approved, the PLI will request subsidy reimbursement from the Central Nodal Agencies (CNAs), namely HUDCO and NHB, by submitting claim forms in the stipulated format on a quarterly basis.
The Indian Government will disburse the subsidy amount to the CNAs immediately, but no later than two months, based on the CNAs’ requests for subsidy sanction.
The Primary Lending Institutions would be required to ensure proper utilisation of the funds and will be required to produce utilisation certificates to their respective departments in relation to the amount of the interest subsidy released to them.
All loans covered under the RRY Scheme will be flagged in the PLIs’ books of accounts for verification by the specified authorities.
The National Housing Bank (NHB) and Housing & Urban Development Corporation Limited will serve as the scheme’s Central Nodal Agencies (CNAs) (HUDCO). The nodal agencies will not give directly to the borrower, but rather through the borrower’s bank accounts or Housing Finance Companies (HFCs) that agree to participate in the RRY Scheme.
The government would distribute the annual interest allowance to lenders through CNAs. The bank will pass it on to the borrower in the shape of a lower EMI.