MUMBAI: The National Housing Bank (NHB) is advocating for increased adoption of PMAY 2.0, highlighting slower-than-anticipated disbursements in the interest subsidy scheme, as per sources involved in discussions with home financiers and regulators.
In a recent meeting with chief executives of major housing finance companies (HFCs), the NHB leader expressed concerns that disbursements were “not meeting expectations” and encouraged lenders to intensify their focus on the program, according to officials who participated in the discussions.
“The goal is to significantly enhance PMAY 2.0, yet the disbursement pace has been underwhelming,” remarked an official with insight into the matter. “The regulator has urged HFCs to recalibrate their risk assessment strategies and increase their engagement to ensure the scheme achieves substantial traction.”
Sources revealed that the government has provided information on over 1.8 million potential beneficiaries to HFCs. However, the uptake has been slow, as lenders perceive the segment to be at a higher risk of repayment defaults.
Senior NHB officials remarked that a significant portion of current disbursements are directed towards larger loan amounts, which demand lesser underwriting efforts and limited investment in ground operations.
This trend contradicts the broader aim of enhancing access to credit for smaller borrowers under the scheme.
HFC executives expressed concerns about increasing stress in beneficiary-led construction, a crucial sector under PMAY, citing high bounce rates. They also highlighted stress in loans under ₹5 lakh, reflecting challenges within the microfinance space.
Although lists of approximately 2,500 beneficiaries per HFC have been distributed across various states, lenders indicated that the small loan sizes do not significantly contribute to balance-sheet growth.
“From a lender’s viewpoint, the viability is a major concern,” stated the CEO of a housing finance firm. “The loan amounts under PMAY 2.0 are quite small, but the costs for underwriting and monitoring are significant, and repayment trends in this category have been inconsistent. Without additional safeguards, it’s challenging to expand this portfolio without risking asset quality.”
Under PMAY 2.0, the maximum eligible loan amount is capped at ₹25 lakh. Beneficiaries will receive a subsidy in five annual installments totaling ₹1.80 lakh, replacing the former one-time subsidy of ₹2.67 lakh.
The subsidy amount remains uniform at ₹1.80 lakh across the economically weaker section (EWS), lower income group (LIG), and middle-income group (MIG) categories, with annual household income limits set at ₹3 lakh, ₹6 lakh, and ₹9 lakh, respectively. These provisions target urban areas.
