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

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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.
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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
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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
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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)

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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

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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.

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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.
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II. Broad Features of the Scheme
EMI* under ISHUP for
(a) ROI = 8% and
(b) Loan amount = Rs.1 lac

Term of Loan EMI EMI Subsidy

(Before) (After)

15 Years Rs.955/- Rs.679/- Rs.28,895/-

20 Years Rs.836/- Rs.542/- Rs.35,169/-

* Source: National Housing Bank

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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
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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.

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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.

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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.

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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.
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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.

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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.
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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.

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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.
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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 MoH & UPA, GoI.

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 IV. INITIATIVES TAKEN
 For the Financial year 2010-11, MoH &UPA
has allocated Rs.200 Crores as the Budget
for the Scheme
 MoH & UPA 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
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 NHB & HUDCO have executed MoU with 26 Public
Sector Banks which are:

Allahabad Bank Indian Bank State Bank of Mysore Dena Bank

Andhra Bank Indian Overseas Syndicate Bank Bank of Maharashtra

Bank
Bank of Baroda Oriental Bank of UCO Bank State Bank of Travancore
Commerce

Bank of India Punjab & Sind Bank State Bank of India State Bank of Bikaner &
Jaipur

State bank of United Bank of India Corporation Bank State Bank of Indore
Hyderabad

Canara Bank Punjab National Union Bank of India J & K Bank

Bank

Central Bank of Vijaya Bank

India
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 NHB & HUDCO have executed MoU with 8
Housing Finance Companies which are:

HDFC Ltd. DHFL Vysya

LIC Housing Finance Ltd. Canfin Homes

HUDCO Dewan Housing Finance Corporation Ltd.

Manipal Home Finance Ltd. Vishwakriya Housing Finance Ltd.

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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.

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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.
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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 Haryana
Assam Jammu& Kashmir West Bengal
Kerala Maharashtra Madhya Pradesh

Karnatka Gujarat Tamil Nadu

Jharkhand Uttar Pradesh Orissa

Delhi Mizoram
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 States in which SLNAs have not been
appointed yet

Himachal Pradesh Tripura

North East States Bihar

Sikkim Uttranchal
Meghalaya Puducherry
Chattisgarh Punjab

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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.

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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........

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Thank You

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