PMAY 2.0 Lending: NHB Urges Housing Finance Companies to Pick Up the Pace

The National Housing Bank (NHB) has flagged slower loan disbursements under the Pradhan Mantri Awas Yojana (PMAY) 2.0 during a recent review with housing finance companies (HFCs). According to The Economic Times reports, the regulator said lending under the scheme has not progressed as expected so far. 

Concerns Raised  

The issue was discussed during a meeting with chief executives of major HFCs last week. NHB officials said disbursals under the interest subsidy programme were falling short of targets. Lenders were asked to improve follow-through and focus more closely on implementation. 

Beneficiary Pool Remains Untapped 

Government agencies have shared details of over 1.8 million potential PMAY 2.0 beneficiaries with housing finance companies. These are households that meet eligibility conditions under the scheme. Despite this, conversion from beneficiary data to actual loan disbursement has remained limited. 

Lenders Flag Stress in Small Loans 

Housing finance companies pointed to higher risk in the beneficiary-led construction segment. Loans below ₹5 lakh have shown elevated bounce rates and early repayment stress, according to the reports.  

It also cited similarities with borrower profiles seen in the microfinance segment, which has faced pressure in recent quarters. 

Cost Structure Limits Scale 

HFCs said small-ticket PMAY loans involve high operating and monitoring costs relative to their size. These loans add limited volume to overall loan books but require similar underwriting and servicing effort. This has constrained the speed at which lenders are expanding PMAY 2.0 portfolios. 

Key Features of PMAY 2.0 

Under PMAY 2.0, the maximum eligible home loan amount is capped at ₹25 lakh. Eligible borrowers receive an interest subsidy of ₹1.80 lakh. The subsidy is paid in five equal annual instalments, replacing the earlier one-time subsidy of ₹2.67 lakh under the previous version. 

Income Limits and Coverage 

The subsidy amount is uniform across Economically Weaker Section (EWS), Lower Income Group (LIG) and Middle-Income Group (MIG) categories. Annual urban income limits are set at ₹3 lakh for EWS, ₹6 lakh for LIG and ₹9 lakh for MIG beneficiaries. 

Read More: Centre Launches ₹4,531 Crore Market Access Support Scheme for Exporters! 

Conclusion 

NHB has indicated that PMAY 2.0 disbursement trends will continue to be reviewed. The regulator has asked lenders to address execution gaps as the scheme progresses. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.   
 
Investments in the securities market are subject to market risks, read all the related documents carefully before investing.