New Delhi, November 6: The Union Cabinet on Wednesday approved the establishment of a ‘special window’ to provide priority debt financing for the completion of stalled housing projects that are in the affordable and middle-income housing sector.
The government said it would commit Rs 10,000 Crore as the sponsor of the fund that would be set up as category-II Alternate Investment Fund (AIF) registered with Sebi.
Announcing the Cabinet decision at a press conference, finance minister Nirmala Sitharaman said that the funds would be entrusted to professional investment managers with the first AIF to be managed by SBICAP Ventures Limited.
The Special Window would provide funds to stalled housing projects enabling them to complete unfinished projects and consequently ensure delivery of homes to a large number of home-buyers.
“This will, in due course, help relieve the financial stress faced by a large number of middle class home buyers who have invested their hard earned money. This will also restore trust between buyers and developers and boost the sentiments of the housing sector as a whole and release large amount of funds stuck in these projects for productive use in the economy,” the FM said.
She added that the fund would not only revive the real estate sector, but would also spur demand for cement, iron and steel industries, and generate employment.
“This initiative will have a positive effect in releasing stress in other major sectors of the Indian economy as well,” Sitharaman said. “The Investment Manager will be responsible to ensure that the funds are used only for construction through appropriate safeguards mandated by RERA and also through deployment of external project monitoring agencies.”
The FM on September 14 had announced a special window for affordable and middle-income housing will be created to provide last mile funding for stressed housing projects. However, at that time, she had said that the window would not cover those projects that had turned NPA and were facing NCLT proceedings.
The finance ministry said that following consultations with other ministries, housing finance companies, banks, NBFCs, investors, and real estate developers, the government had decided that the special window would also cover projects that are classified as NPA or where NCLT proceedings have already started, but the project meets the other eligibility criteria.
The other criteria include that the projects be net-worth positive, fall in affordable and middle-income housing category, be registered with RERA, have a reference by existing lender.