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INTEREST SUBSIDY SCHEME FOR HOUSING THE URBAN POOR (ISHUP)

INTEREST SUBSIDY SCHEME FOR HOUSING THE URBAN POOR (ISHUP). Ministry of Housing & Urban Poverty Alleviation Government of India. Structure of Presentation. Introduction Broad Features of the Scheme Operational Modalities Steering Committee Role of Central Government

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INTEREST SUBSIDY SCHEME FOR HOUSING THE URBAN POOR (ISHUP)

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  1. INTEREST SUBSIDY SCHEME FORHOUSING THE URBAN POOR (ISHUP) Ministry of Housing & Urban Poverty Alleviation Government of India

  2. Structure of Presentation • Introduction • Broad Features of the Scheme • Operational Modalities • Steering Committee • Role of Central Government • Role of State Government • Role of Central Nodal Agencies • Implementing Agencies (Banks/HFIs) • Initiatives Taken – Post Launch • Way Forward 1

  3. I. Introduction • Need to provide Affordable Housing for All • Major initiative for EWS/LIG housing under JNNURM • ISHUP as additional instrument for affordable housing for EWS/LIG in urban areas • Capital subsidy beneficiaries of JNNURM are not eligible. 2

  4. II. Broad Feature of the Scheme Purpose • To provide home loan with Central government subsidy to EWS/LIG person for • Acquisition of house • Construction of house • Beneficiaries having no house in his/her name or in the name of his/her spouse or any dependent child • Beneficiaries own land but have no pucca house 3

  5. II. Broad Feature of the Scheme Eligibility • Only for EWS/LIG beneficiaries • EWS whose family income is upto Rs.5000 per month • LIG whose family income is between Rs.5001 to Rs.10000 per month • Will be revised by the Steering Committee from time to time 4

  6. II. Broad Feature of the Scheme Loan Admissibility for EWS • Subsidy of 5% for an loan amount of Rs.1 lakh for a period of 15 to 20 years. • Minimum house area : 25 sqm. (Built up area) • Additional loan if needed at unsubsidized rate. for LIG • Subsidy of 5% for an loan amount of Rs.1 lakh for a period of 15 to 20 years. • Minimum house area : 40 sqm.(Built up area) 5

  7. II. Broad Feature of the Scheme Terms of Loan and Subsidy Disbursement • Subsidy will be 5% on the interest charge for EWS/LIG upto Rs.1 lakh for the full period of 15 to 20 years • The Net Present Value of the subsidy arrived on the basis of Notional Discount Rate of 9% p.a. for the period of loan • Two central nodal agencies, NHB and HUDCO • NPV to be released by the Government to central nodal agencies 6

  8. II. Broad Feature of the Scheme Terms of Loan and Subsidy Disbursement ..contd. • Nodal agency will pass the subsidy to the borrowers through banks and HFIs (implementing agencies) • Lending rates to be monitored by the Steering Committee • Nodal agencies will publish the list of lenders under the scheme which will be approved by the Steering Committee. 7

  9. II. Broad Feature of the Scheme Terms of Loan and Subsidy Disbursement ..contd. • Borrower may choose fixed or floating rates. An additional 1% p.a. will be permitted if fixed rate loans are extended. • Mortgage of dwelling unit will be accepted as primary security • There will be no collateral security for loans upto Rs.1 lakh • Levy of pre-payment charges would not be permitted. • Scheme will close in 2012. However, the loans extended in the last year will also have repayment period of 20 years. 8

  10. II. Broad Features of the Scheme EMI* under ISHUP for (a) ROI = 8% and (b) Loan amount = Rs.1 lac * Source: National Housing Bank 9

  11. II. Broad Feature of the Scheme Selection of Beneficiaries • The borrower must have plot of land for construction or have identified a purchasable house. • Borrower would be free to approach and negotiate a loan under the scheme directly with the lender. • Identification of beneficiaries will be undertaken by ULB or by local nodal agencies and assist them in paper work and procedure of bank loan. Or • borrowers can approach directly to the Financial Institutions 10

  12. II. Broad Feature of the Scheme Selection of Beneficiaries…contd. • Borrowers selected should as far as possible be in the ratio of 70:30 respectively for EWS and LIG categories. • Lender will sanction the loan as per their own risk assessment and procedural requirements. • The release of loan will be linked to the pace of construction which ideally is to be completed in 1 year. • The lending bank will monitor the progress of construction. 11

  13. III. Operational Modalities Steering Committee • A Steering Committee has been constituted under the Chairpersonship of Secretary (HUPA) • Steering Committee will be responsible for operational instructions and monitoring the implementation of the scheme. • Steering Committee will decide the disbursal of subsidy to NHB and HUDCO • Steering Committee will formulate separate guidelines for association of NGOs, CBOs, MFIs and SHGs. 12

  14. III. Operational Modalities Role of Central Government • MoHUPA is responsible for implementation of the scheme including review and monitoring • Undertake wide media campaign and awareness programme • Develop MIS at national level to monitor the scheme. 13

  15. III. Operational Modalities Role of State Government • Identify local level nodal agency which will identify, motivate and organised beneficiaries to seek loans. • Help local level nodal agency to identify and motivate beneficiaries who have land and prepared to build for themselves. • Will create a Cell/Desk and provide with a social worker to assist the beneficiaries understand the details of the scheme. 14

  16. III. Operational Modalities Role of State Government…contd. • State Govt/ULB will assist lenders in identifying beneficiaries and undertaking verification. • Ensure availability of basic infrastructure. • Forward applications of eligible beneficiaries to the Banks and HFIs. • Undertake media campaign in local languages. 15

  17. III. Operational Modalities Role of Central Nodal Agencies • NHB/HUDCO will release NPV based subsidy to the Banks and HFIs availing their services on quarterly basis. • NPV subsidy will be given to the lenders on upfront and quarterly basis • NPV subsidy given to lenders will be deducted from the principal amount of the borrower who will then have to pay EMI to banks at agreed document rate for the whole duration of the loan. • NHB/HUDCO will be responsible for monitoring and data collection of NPV based subsidy funds. 16

  18. III. Operational Modalities Role of Central Nodal Agencies…contd. • On receipt of information regarding the total loan disbursed by PLI to EWS/LIG during a three month period, the Central Nodal Agencies will release the subsidy amount to PLIs directly at the end of each quarter. • MoHUPA will make money available to the Central Nodal Agency on quarterly basis in advance based on projections by PLIs/CNAs. 17

  19. III. Operational Modalities Role of Banks and HFIs • Will have option to avail the resources of either of the nodal agency • Provide utilisation certificate to NHB/HUDCO on half yearly basis. • Provide each loanee a statement which will make him/her understand the amount given as subsidy, how the subsidy has been adjusted and the impact of subsidy on his/her loan. • Banks will clearly explain the borrowers the consequences of availing loan on fixed/floating rate of interest. • Income certification of beneficiaries can also be undertaken by Public Sector Banks which will be subsequently audited by CNA. 18

  20. III. Operational Modalities Targets......... • Coverage under ISHUP is to be decided at a decentralised level i.e at the ULB/ District/ State level. • Targets to be discussed at SLBC where they could be consolidated/ finalised. • SLBC Convenor Bank to also communicate measures taken to MoHUPA, GoI. 19

  21. IV. INITIATIVES TAKEN • For the Financial year 2010-11, MoHUPA has allocated Rs.200 Crores as the Budget for the Scheme • MoHUPA has been addressing various issues relating to the implementation of the Scheme raised during the workshops/review meetings with State Government and Banks • Progress under the Scheme is being reviewed in the FM’s meeting with CEOs of PSBs 20

  22. NHB and HUDCO have executed MoU with 26 Public Sector Banks & 8 Housing Finance Companies which are: 21

  23. For generating awareness about the Scheme Sensitisation Workshops/Regional Consultations were held at New Delhi, Hyderabad, Ahmedabad, Chennai, Mumbai, Trivandrum, Jaipur, Chandigarh, Bhopal, Bengaluru, Vijyawada. In these meetings NHB/HUDCO have been participating on a regular basis. • NHB on behalf of MoHUPA convened a Meeting of all SLBCs to address operational issues of the Scheme. • Formats for MIS at National Level are being prepared in coordination with NHB. • Seven such meetings scheduled by HUDCO in Andhra Pradesh in Aug./Sept. 2010 and four meetings in Tamil Nadu in Sept. 2010. • All other HUDCO’s ROs have once again been advised to hold such Regional workshops. 22

  24. Four Steering Committee Meetings have been held so far, for monitoring the implementation of the Scheme. The various important decisions which have been taken are as under: i. All loans extended by the banks w.e.f 26.12.08 are eligible for claiming the NPV of Interest Subsidy under the Scheme. ii. Draft of MoU along with the necessary formats were approved iii. Necessary amendments in MoU were made including the Clause No.9 which stated that the recoveries against NPA shall be shared on pro rata basis between the GoI & Banks. 23

  25. iv. Inclusion of RRBs & Private sector Banks for the implementation of the ISHUP Scheme was approved. v. According to para 3.3 of the Scheme guidelines the eligibility of SHGs has been approved. vi. For the speedy implementation of the Scheme the committee has approved that Public Sector Banks are also eligible for providing the Income certification to the eligible beneficiaries subject to audit by CNAs. vii. Facilitation fee of Rs.100 per approved application under the Scheme can be extended to MFIs/CBOs/NGOs/Individuals. 24

  26. INITIATIVES OF STATE GOVERNMENTS • State Governments are in the process of appointing State Level Nodal Agencies (SLNAs) • States in which SLNAs have been appointed are as under: 25

  27. States in which SLNAs have not been appointed yet 26

  28. Processing of Claims So Far: • Till 15.8.2010 NHB had received 54 claims claiming for Interest Subsidy of Rs. 2.47 Crores out of which 1.19 Crores has already been sanctioned and released by MoHUPA • Till 15.8.2010 Claims for Rs.68.49 lakhs were in consideration of MoHUPA & claims for Rs.59.94 lakhs had been referred back to PLIs for rectification • Till 15.8.2010 HUDCO had processed claims of Rs.7 lakhs which have already been sanctioned by MoHUPA. • The Ministry has sanctioned an amount of Rs. 5 crore to HUDCO and Rs. 6 crore to NHB on 06.9.2010 as advance of subsidy to expedite claims. 27

  29. Issues Under Consideration • State Government to facilitate the by appointment of nodal agencies, identification of beneficiaries, removing constraints regarding mortgagebality of title of land, stamp duty etc., • Bankers to allocate targets and sanction loans to target segments in consultation with SLNAS. and review progress at zonal levels. 28

  30. V. Way Forward………… We look forward to an effective and fruitful partnership with the State Govt, ULBs and Banks/HFIs for the successful implementation of ISHUP Scheme........ 29

  31. Thank You

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