Credit Risk Guarantee Fund Scheme for Low Income Housing

The Ministry of Housing and Urban Poverty Alleviation, Government of India, has established a Credit Risk Guarantee Fund Trust for providing guarantees in respect of low-income housing loans. A Credit Risk Guarantee Fund Scheme for Low Income Housing (CRGFS) has been launched by the Government of India on 31st October 2012, which will be managed by the National Housing Bank.

1. The trust shall cover Housing Loans sanctioned to new eligible borrower in the low income housing sector in urban areas for following:-

• Housing Loans not exceeding Rs.8.00 Lacs after entering into an agreement with the Trust, without any collateral security and/or third party guarantees.
• A housing unit size up to 430 sq ft (40 sq m) carpet area and to which housing loan has been provided without any collateral security and/or third party guarantee.

2. Eligible borrowers, as defined above, forming a group or housing society of at least 20 members, shall also be eligible under the scheme.
3. Activities that are eligible for Guarantee Cover are home improvement, construction, acquisition and purchase of new or second hand dwelling units involving a Housing Loan amount not exceeding Rs. 8 lakh per person.
4. Economically Weaker Section (EWS) means households with household income up to Rs.1,00,000/- per annum or as revised by the Ministry of Housing & Urban Poverty Alleviation, Government of India, from time to time.
5. Lower Income Group (LIG) means households with household income between Rs.1,00,001/- to Rs.2,00,000/- per annum or as fixed by the Ministry of Housing & Urban Poverty Alleviation, Government of India, from time to time.
6. Guarantee cover shall commence from guarantee start date and shall run through the agreed tenure of the housing loan and for a maximum period of 25 years or loan termination date, whichever is earlier.

New individual borrowers in the EWS/LIG category of the population who are seeking individual housing loans not exceeding a sum of Rs. 8 lakhs or such amount as may be decided by the Trust from time to time and a housing unit size up to 430 sq.ft. (40 sq.m) carpet area and to which housing loan has been provided without any collateral security and/or third-party guarantee. Eligible borrowers, as defined above, forming a group or housing society of at least 20 members, shall also be eligible under the scheme.

The eligible borrower shall be required to submit an undertaking to the lending institution to the effect that she/he has not availed any other housing loan covered under this scheme nor any additional risk cover has been granted to the housing loan availed by her/him by Government or by any general insurer or any institution or any other person or association of persons carrying on the business of insurance, guarantee or indemnity.

Eligible Activity

Activities that are eligible for Guarantee Cover are home improvement, construction, acquisition and purchase of new or second-hand dwelling units involving a housing loan amount not exceeding Rs. 8 lakhs per person. Loans given fully/partly for renovation/repairs are not eligible for the Guarantee Cover under the scheme.

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Processing Charges

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Housing loans not eligible under the scheme

The following housing loans shall not be eligible for being guaranteed under the scheme:

• Any housing loan in respect of which risks are additionally covered by Government or by any general insurer or any institution or any other person or association of persons carrying on the business of insurance, guarantee or indemnity to the extent they are so covered.
• Any housing loan granted to any borrower, who has availed himself of any other housing loan covered under the scheme(s) mentioned in clause (I) above and where the lending institutions have invoked the guarantee provided by the Trust or under the schemes mentioned in clause (I) but has not repaid any portion of the amount due to the Trust or under the schemes mentioned in clause (I) as the case may be, by reason of any default on the part of the borrower in respect of that housing loan.
• Any housing loan which has been sanctioned by the lending institution against collateral security and/or third-party guarantee.
• Any housing loan which has been sanctioned by the lending institution with interest rate more than the prevailing rate applicable for that eligible loan category or 2% over the base-rate of the lending institution, whichever is easier.

Economically Weaker Section (EWS)

Economically Weaker Section (EWS) means households with household income up to Rs. 1 lakh per annum or as revised by the Ministry of Housing & Urban Poverty Allevation, Government of India, from time to time.

Low Income Group (LIG) category

Lower Income Group (LIG) means households with household income between Rs. 1 lakh to Rs.2 lakhs per annum or as fixed by the Ministry of Housing & Urban Poverty Alleviation, Government of India, from time to time.

Low Income Housing

A housing unit for economically weaker and low-income individuals of size up to 430 sq.ft. (40 sq.m) carpet area.

Tenure of guarantee cover

Guarantee cover shall commence from the guarantee start date and shall run through the agreed tenure of the housing loan and for a maximum period of 25 years or loan termination date, whichever is earlier.

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