 "banks, finance")
The Centre is asking banks to participate more actively in the "special window" it has created to help complete real estate projects of more than Rs three trillion. So far, only two bank-funded projects have been taken up under the Special Window for Completion of Affordable and Mid-income Housing (SWAMIH) Investment Fund.
ET reported that the Centre wants to expedite the resolution of stalled real estate projects.
In order to sort out any issues and ensure effective coordination. At least three rounds of meetings have been conducted with stakeholders in the past two months. In 2019, the Centre had set up the SWAMIH fund to facilitate the completion of stalled housing projects. The fund has approved 131 projects with a deal size of Rs 13,600 crore, according to the latest data.
The special window is being handled by SBICAP Ventures and has been structured as an alternate investment fund (AIF). The official said that more bank-led projects need to be put on track by the investment fund.
Most banks have agreed to give SWAMIH Fund the senior or first charge over the portion of the project for which the financial support from the fund would be used. This is a necessary condition for SWAMIH fund to provide funding to stressed or stalled housing projects, as the fund will only lend money to projects where it has the first charge on the assets, except in cases where a regulatory authority holds the first charge. The first charge holder will have the first right to collect the repayments from the project before the other creditors.
Another official was quoted as saying that lenders were initially reluctant to give up the first charge on stressed or stalled housing projects. However, the official said that most lenders have now agreed to do so.
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A bank executive said that lenders have asked the Reserve Bank of India (RBI) for an exemption from the existing regulations so that any fresh funding for stalled real estate projects can be considered standard loans.
At the current moment, SWAMIH is only taking up projects which have a positive net worth. According to reports, it has exited 12 projects and has given initial approval to around 110,000 units.
