MUMBAI: The National Housing Bank (NHB) is pushing for deeper adoption of PMAY 2.0, flagging slower-than-expected disbursements under the interest subsidy scheme, sources aware of the discussions between home financiers and their regulator told ET.

During a review meeting with chief executives of leading housing finance companies (HFCs) last week, the NHB chief said disbursements were "not up to the mark" and urged lenders to sharpen their focus on the programme, officials familiar with the discussions said.

"The intent is to significantly scale up PMAY 2.0, but the pace of disbursements has been slower than expected," said an official familiar with the discussions. "The regulator has asked HFCs to recalibrate their risk assessment frameworks and step up participation to ensure the scheme gains
meaningful traction."

According to people aware of the matter, the government has shared details of over 1.8 million potential beneficiaries with HFCs. However, uptake has remained sluggish, with lenders viewing the segment as carrying a higher risk of repayment bounces.

Senior NHB officials also noted that a bulk of current disbursements are concentrated in larger ticket-size loans, which require relatively lower underwriting effort and limited investment in on-ground infrastructure.

This, they said, runs counter to the broader objective of expanding credit access to smaller borrowers under the scheme.

HFC executives, however, flagged rising stress in beneficiary-led construction, an important vertical under PMAY, citing elevated bounce rates. They also pointed to stress in loans below Rs 5 lakh, partly reflecting challenges in the microfinance sector.

While lists of around 2,500 beneficiaries per HFC have been shared across multiple states, lenders said the small ticket sizes involved do not materially move the needle for balance-sheet growth.

"From a lender's perspective, the challenge is viability," said the CEO of a housing finance company. "The ticket sizes under PMAY 2.0 are very small, underwriting and monitoring costs are high, and repayment behaviour in this segment has been volatile. Without additional safeguards, it is difficult to scale this book without compromising asset quality."

Under PMAY 2.0, the maximum eligible loan amount has been capped at Rs 25 lakh. Beneficiaries will receive the subsidy in five annual instalments totalling Rs 1.80 lakh, replacing the earlier one-time subsidy of Rs 2.67 lakh.

The subsidy amount is uniform at Rs 1.80 lakh across economically weaker section (EWS), lower income group (LIG) and middle-income group (MIG) categories, with annual household income caps of Rs 3 lakh, Rs 6 lakh and Rs 9 lakh, respectively. These provisions apply to urban areas.