Boost for realty: Govt, SBI, LIC create Rs 25k-cr fund for stalled projects
Move comes a day after Finance Minister Nirmala Sitharaman announced the government was readying more reform measures to boost economy
 "FM Nirmala Sitharaman")
Finance Minister Nirmala Sitharaman. Photo: PTI
Finance Minister Nirmala Sitharaman on Wednesday announced that the Union Cabinet had approved setting up of an alternative investment fund (AIF) with an initial corpus of Rs 10,000 crore to help revive stalled housing projects in the middle- and low-income group. She also said that she had spoken to State Bank of India (SBI), Life Insurance Corporation (LIC) and others to take the corpus of the realty AIF to Rs 25,000 crore.
"Many home buyers approached us where they had paid advance but flats were not complete.
Our survey showed approx 458,000 housing units were stuck in India. Over 1,600 realty projects were stuck," she said while talking to reporters in the national capital.
The decision came a day after Sitharaman hinted the government was planning more reform measures to boost growth. Speaking late on Tuesday, Sitharaman had said the government was working on steps to resolve the issues being faced by the real estate sector, which had had a spillover effect on many industries. "Government will soon use its strong electoral mandate to usher in the next wave of reforms, and not to miss the bus this time," she had said.
It should be noted that many analysts have been calling for urgent reforms in the factor markets, especially regarding land and labour, to get the economy out of the trough, citing the strong political mandate the government enjoys.
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It is now up to SBI to set up a team and start the process. The govt has done a good job by giving boost to the real estate sector. NBCC will complete JP and Amrapali projects as this fund is not meant for these projects: Samir Jasuja, Propequity
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It is important that funds from AIF goes to projects stuck in NCLT and NPA: Keki Mistry, VC & CEO, HDFC
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Projects that need less support will move quickly. RERA data will come in handy to do this: Satish Magar, CREDAI
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The priority must be to complete those projects that have at least started. This will help sell unsold inventory and will also help bring in consumer money: Samir Jasuja, Propequity
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There is no homebuyer in the country who doesn't need help: Nirmala Sitharaman
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NPA and NCLT stuck projects needed the boost. It is a good initiative by FM Sitharaman.: Satish Magar, CREDAI
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WIth the inclusion of projects under NPA and NCLT proceedings, almost 80 per cent projects in NRC and Mumbai will come to life: Samir Jasuja, Propequity
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The fund is expected not only to support the real estate sector but also generate commercial return for its investors.
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The special window has been structured as an AIF to pool investments from other government-related and private investors including public financial institutions, sovereign wealth funds, public and private banks, domestic pension and provident funds, global pension funds and other institutional investors, etc.
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Criteria for availing of funding
The special window of AIF will provide last-mile funding to projects that meet the following criteria:
• Net-worth positive
• Affordable and middle-income housing project
• On-going projects registered with RERA
• Reference by existing lender
• Will include stressed projects classified as NPA and those in NCLT
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Relief is not limited to a Rs 10,000-crore or Rs 25,000-crore support. It's a window we have opened for support until such time as stalled projects come out of distress, says FM Sitharaman
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The total size of the fund, after investment from SBI and LIC to be Rs 25,000 cr, says FM Sitharaman
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FM Sitharaman says she has already spoken to State Bank of India and Life Insurance Corp
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AIF to exclude projects that have been declared liquidation-worthy by NCLT
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Funding on priority for commercially viable projects. Those where work has not started will not be elegible for funding, says FM Sitharaman.
Topics : Nirmala Sitharaman Real Estate real estate companies Economic reforms Cabinet decision Real estate revival
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First Published: Nov 06 2019 | 7:46 PM IST
