← Government Schemes & Missions: Household & Livelihood (all topics)
PMAY-U 2.0 & interest subsidy scheme (ISS)
What it is
Pradhan Mantri Awas Yojana-Urban 2.0, launched Sep 2024 for five years to 2029, targeting one crore additional urban homes. The Interest Subsidy Scheme is its credit-linked component, replacing the earlier CLSS that lapsed in 2021-22
Eligible EWS, LIG and MIG borrowers get a 4% subsidy on loans up to Rs 8 lakh, capped at Rs 1.80 lakh and paid as five annual instalments of Rs 36,000 credited to the loan account
Impact on industries
- Directly expands the eligible borrower pool by improving affordability at the margin, in the segment where a small EMI reduction decides whether a loan is viable
- Well designed for lenders - the subsidy continues only while the loan stays current, creating a repayment incentive; FY27 allocation to PMAY-U is Rs 18,625 cr
- Coverage is narrower than the headline suggests - the 4% subsidy applies only to the first Rs 8 lakh of loan, so benefit tapers quickly as ticket size rises
- Eligibility screening is strict, including a 20-year lookback on prior housing benefits, adding administrative risk to conversion