Rural Housing Interest Subsidy Scheme (RHISS)

The Government of India (GoI) has envisioned the nation to be housed in pucca houses by the time it completes 75 years of independence. Under this vision ‘Housing For All by 2022’, every houseless family or household living in a derelict or a kutcha house in rural areas will live in dignified conditions with basic amenities of water, sanitation and electricity. To enable this endeavour, the GoI is providing institutional finance under the Rural Housing Interest Subsidy Scheme (RHISS).

Spearheaded by the Ministry of Rural Development, the RHISS will provide rural households with inexpensive and easy access to institutional finance in the form of loans from PLIs such as IIFL Home Finance Ltd, at a subsidized interest rate, to construct a pucca house or modify their current house.

Who are the different stakeholders under RHISS?

There are three principal stakeholders in RHISS:

    1. The beneficiary or applicant.
    2. The Central Nodal Agency (CNA) i.e. National Housing Bank which has implemented the scheme.
    3. The Primary Lending Institute (PLI) such as IIFL Home Finance, which will extend the loan to the applicant. The PLIs are identified by the CNA.

Who are covered in RHISS?

    1. RHISS covers a total of 65,535 gram panchayats across India, practically entire India, excluding statutory towns as per census 2011 and towns notified subsequently for coverage under PMAY (Urban)
    2. The house being constructed/ modified should adhere to the structural safety guidelines and norms of India. The pucca house should be able to endure usual wear and tear for at least 30 years with adequate maintenance, and integrate disaster resistant features such as string roof and walls.

What are the financial subsidy/benefits under RHISS?

Beneficiaries seeking housing loan from any PLI as identified by CNA, would be eligible for a 3% (per annum) interest subsidy on the principal loan amount. This subsidy shall be valid for a maximum loan amount of first Rs. 2 Lakh, regardless of the total value of the loan amount. Duration of the loan repayment could be up to 20 years or the full period of the loan, whichever is lesser.

Interest Subsidy (% p.a.)3%
Maximum Housing Loan Tenure (in Years)20
Eligible Housing Loan Amount for Interest Subsidy (Rs.)2,00,000
Discount Rate for NPV calculation of interest subsidy (%)9%

If the total loan value is below Rs. 2 Lakh, then the subsidy will be calculated on actual loan amount.

The applicant or beneficiary will be given a maximum subsidy of Rs. 38000 on their interest.

Process to receive benefit under RHISS?

    1. Application received by the PLI, such as IIFL Home Finance Ltd.
    2. Disbursement of loan to the applicant by the PLI, and verifying the applicant’s eligibility for RHISS basis preset eligibility criteria.
    3. Submission of claim under RHISS to the CNA by the PLI.
    4. The CNA will assess and approve the claim.
    5. The CNA will release the subsidy amount to the PLI.
    6. Subsidy will be credited to the beneficiary’s loan account by the PLI and will result in the reduction of Equated Monthly Installments (EMIs).

The process of availing benefit under RHISS is smooth and ensures that the applicant only has to focus on enhancing their living condition and not go through tedious paperwork and processes of applying a home loan or availing a subsidy.

With the whole government ecosystem working in tandem with other stakeholders for the ambitious initiative, ‘Housing For All’ seems like an indisputable reality.

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