NEW DELHI: The cabinet approved a Rs 25,000-crore special window to provide funding to housingNSE 0.40 % projects that are stuck, with the aim of reviving the key sector, providing a boost to the economy and bringing relief to home buyers. The money will be available for “net worth positive” projects, said FM Nirmala Sitharaman.
As many as 1,600 projects with 458,000 dwelling units will potentially be covered under the dispensation. The government will contribute Rs 10,000 crore and the rest will come from LIC and State Bank of India besides sovereign wealth funds and pensions funds.
“The creation of (a) special window for affordable and middle income housing projects would revive the real estate sector and generate considerable employment,”
the government said in a release, adding that this will spark job creation as well as increased demand for cement and iron and steel. “This initiative will have a positive effect in releasing stress in other major sectors of the Indian economy as well.”
This special window will be set up as a category-II Alternate Investment Fund, which will pool investments from the government and other investors. An escrow account will be set up to be managed by SBINSE -0.68 % Caps that will appraise projects and release funds, Sitharaman said.
Those eligible will be incomplete housing units of less than Rs 2 crore in Mumbai; less than Rs 1.5 crore in Delhi-NCR, Chennai, Kolkata, Bengaluru and Pune; and less than Rs 1 crore in other parts of the country. “All those projects in affordable and middleincome category will be now finding relief,” Sitharaman said.
‘RBI to Issue Clarificatory Note’
Sitharaman was addressing reporters after a meeting of the cabinet chaired by PM Narendra Modi on Wednesday.
“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,” the government said.
Any project irrespective of stage of completion will be eligible if it is net worth positive and has Real Estate (Regulation and Development) Act or Rera registration, Sitharaman said.
She said the government had held detailed discussions with banks and the Reserve Bank of India (RBI) on dealing with nonperforming assets (NPAs). The central bank will issue a clarificatory note on the matter, she said.
Sitharaman had announced the fund on September 14 but it had been restricted to providing last-mile funding for projects that were not in bankruptcy court or already tagged as bad debt. These conditions have now been relaxed after detailed consultations with builders as well as homebuyers, she said.
A government official said the total value of the homes that are stuck is estimated at Rs 1.39 lakh crore and about Rs 55,000-80,000 crore will be needed to complete them.