INTEREST SUBSIDY
SCHEME FOR
HOUSING THE URBAN
POOR (ISHUP)
Ministry of Housing & Urban Poverty Alleviation
Government of India
Structure of Presentation
I.
Introduction
II.
Broad Features of the Scheme
III.
Operational Modalities
a. Steering Committee
b. Role of Central Government
c. Role of State Government
d. Role of Central Nodal Agencies
e. Implementing Agencies (Banks/HFIs)
IV.
Initiatives Taken – Post Launch
V.
Way Forward
1
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
JNNURM are not eligible.
of
2
II. Broad Feature of the Scheme
Purpose
 To provide home loan with Central
government subsidy to EWS/LIG person for
a) Acquisition of house
b) 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
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
Committee from time to time
Steering
4
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
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
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
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
II. Broad Features of the Scheme
EMI* under ISHUP for
(a) ROI = 8% and
(b) Loan amount = Rs.1 lac
Term of Loan
EMI
(Before)
EMI
(After)
Subsidy
15 Years
Rs.955/-
Rs.679/-
Rs.28,895/-
20 Years
Rs.836/-
Rs.542/-
Rs.35,169/-
* Source: National Housing Bank
9
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
Financial Institutions
directly
to
the
10
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
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
III. Operational Modalities
Role of Central Government
 MoHUPA is responsible for implementation
of the scheme including review and
monitoring
 Undertake wide media
awareness programme
campaign
and
 Develop MIS at national level to monitor
the scheme.
13
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
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
languages.
campaign
in
local
15
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
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
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
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
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
NHB and HUDCO have executed MoU with 26 Public
Sector Banks & 8 Housing Finance Companies
which are:
Allahabad Bank
Indian Bank
State Bank of Indore
Andhra Bank
Indian Overseas Bank
State Bank of Mysore
Bank of Baroda
J&K Bank
State Bank of Travancore
Bank of India
Oriental Bank of Commerce
Syndicate Bank
Bank of Maharashtra
Punjab & Sind Bank
UCO Bank
Canara Bank
Punjab National Bank
Union Bank of India
Central Bank of India
State Bank of Bikaner &
Jaipur
United Bank of India
Corporation Bank
State bank of Hyderabad
Vijaya Bank
Dena Bank
State Bank of India
HDFC Ltd.
DHFL Vyasa
Manipal Housing Finance
Syndicate Limited
LIC Housing Finance
Canfin Homes
Vishwakriya Housing Finance
Limited
HUDCO
Dewan Housing Finance Corporation Ltd.
21
 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
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
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
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:
Andhra Pradesh
Rajasthan
Assam
Jammu& Kashmir
Kerala
Mahrashtra
Karnatka
Gujrat
Jharkhand
Uttar Pradesh
Madhya Pradesh
Haryana
Tamil Nadu
West Bengal
25
 States in which SLNAs have not been
appointed yet
Himachal Pradesh
Orissa
Delhi
Bihar
Sikkim
Uttranchal
Meghalaya
Puducherry
Chattisgarh
Punjab
Tripura
North East States
26
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
MoHUPA.
have
already
been
sanctioned
by
 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
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
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
Thank You
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