In a relief for homebuyers, the government on Saturday announced a special window to provide last mile funding for stuck housing projects in affordable and middle income category, provided they are non-NPA and non-NCLT projects.
Announcing a series of measures for the crisis-hit real estate sector, Finance Minister Nirmala Sitharaman said the government would contribute Rs 10,000 crore for this special fund and roughly same amount would be given by outside investors. Only those projects which are net worth positive would be covered under the scheme.
She added that projects which are already facing National Company Law Tribunal (NCLT) proceedings would follow due procedure and won’t be covered in this special window.
“The objective is to focus on construction of unfinished units. The government on the lines of NIIF (National Investment and Infrastructure Fund) can contribute to the fund while rest of the investors would be LIC and other institutions and private capital from banks, sovereign funds and DFIs (Development Finance Institutions),” she said.
Sitharaman added the special fund would be professionally run with experts from housing and banking sector with no role of the government in its functioning. She added that this group of experts would identify middle income and affordable housing projects across the country where 60 per cent work is already complete and the rest of the work is stuck due to lack of sufficient cashflow.
“So such stuck projects will get relief and unfinished projects would be completed. People waiting for their homes and paying both EMIs and rent will get relief from this measure,” she said.
Meanwhile, she also announced relaxation of External Commercial Borrowing (ECB) guidelines for affordable housing, in consultation with the RBI, in order to facilitate financing of home buyers who are eligible under the Pradhan Mantri Awas Yojana. This is in addition to the existing norms for ECB for affordable housing.
The Finance Minister added that the interest rate on house building advance would be lowered and linked with the 10-year G-Sec yields.
“Government servants contribute to a major component of demand for houses. This will encourage more government servants to buy new houses,” she said.