Indian government unveils $3.5 billion rescue fund for stuck housing projects
The Centre will infuse Rs 10,000 crores into real estate market to revive stalled housing projects across the nation. Another Rs 15,000 crores will be contributed by LIC and SBI.
The Centre has announced a Rs 25,000 crore stimulus package for the ailing real estate sector. Finance Minister Nirmala Sitharaman on Wednesday announced that the government plans to give impetus to the housing market to revive over 1600 stalled housing projects covering 4.58 lakh units.
The Centre will infuse Rs 10,000 crores into the real estate market to revive stalled housing projects across the nation. Another Rs 15,000 crores will be contributed by LIC and SBI.
Apart from Rs 25,000 crores from Centre, SBI and LIC, the sovereign and pension funds have also agreed to invest in the market. The funds will be used to provide priority debt financing for the completion of stalled housing projects in the Affordable and Middle-Income Housing sector.
Addressing a presser in New Delhi, Nirmala Sitharamn said that the government had been planning the move for the past two months as it held several meetings with the banks and the RBI.
The fund will provide relief to developers with unfinished projects and ensure delivery of homes to buyers. If the developer has not declared liquidation, they can avail the cover, the government said.
“For purposes of funds to be set up, the government shall act as sponsor and total funds committed by the government would be up to Rs 10,000 crores. Funds will be set up as Category-II Alternate Investment (AIFs) Fund registered with Securities and Exchange Board of India (SEBI),” Nirmala Sitharaman told media.
“Move will help relieve financial stress faced by a large number of middle-class homebuyers who have invested their hard-earned money. This will also release a large amount of funds stuck in these projects for productive use in the economy,” government spokesperson KS Dhatwalia said.
The decision will also generate considerable employment, revive demand of cement, iron and steel industries and relieve stress in other major sectors of the economy, he said.
The last mile funding will be available to real estate projects which fulfill the following criteria:
- Net-worth positive
- Affordable & middle-income housing project
- On-going projects registered with RERA
- Reference by existing lender
- include stressed projects classified as NPA & NCLT
Earlier on September 14, Nirmala Sitharaman had announced that a special window for affordable and middle-income housing will be created. This special window will provide last-mile funding for housing projects which are stressed.
Subsequently, inter-ministerial consultations and several stakeholder consultations were held with the housing industry, including housing finance companies, banks, NBFCs, investors and real estate developers. Problems being faced by homebuyers, developers, lenders and investors were ascertained that could be addressed through the Special Window, the government statement said.
Source : indiatoday.in