New Delhi: In a move that can potentially bring significant relief to home buyers in the country, government today announced setting up of an Alternate Investment Fund (AIF) of Rs 25,000 crore to help about 1,600 housing projects that are stuck.
Finance Minister Nirmala Sitharaman said that the Union Cabinet has approved setting up the fund in which the government will put in Rs 10,000 crore. Life Insurance Corporation of India and State Bank of India will together provide Rs 15,000 crore in the fund. However, there is a caveat for the projects to get relief from this fund-they have to net worth positive and must be registered with RERA. The projects that will be covered under the fund will have to be affordable or middle income projects.
“We have to start in some way to give sustainable solutions to home buyers….For purposes of funds to be set up, government shall act as sponsor and total funds committed by government would be up to Rs 10,000 crore. Funds will be set up as Category II AID registered with Securities and Exchange Board of India” Sitharaman said.
She said that there are around 4.58 lakh houses that are stuck at the moment that will benefit with this fund. The exact definition of affordable houses for the purpose of this fund will be decided in the next few days. “For example the units which are under Rs 2 crore in Mumbai, Rs 1.5 crore in Chennai, Delhi, Bengaluru, Kolkata, Hyderabad and Pune and Rs 1 crore and less in other cities might benefit. But the amount is yet to be fixed,” Sitharaman said.
There will be a professional body that will be set up to monitor the AIF. This body will look at each case and housing project separately and deiced whether to release funds or not. The relief package for each project will not be release in one go but on completion of various stages as decided by the body.
Project that are under NCLT or these that have been declared non-performing assets (NPA) can benefit from this fund. However, the exact conditions under which the funds would be released for NCLT or NPA projects will be decided by RBI in consultation with other stakeholders.
The industry has welcomed the government decision. “Much in line with her promise to bring relief to the realty sector, the FM announced that an Rs 10,000 crore fund has got the Union Cabinet nod. To be used for last-mile funding of stuck affordable and mid segment projects, this is a critically important move which eliminates the ambiguity which surrounded the timelines for setting up the fund, and its actual implementation. Also, the special window will get investments from institutions like LIC, SBI and others which will take the corpus to nearly INR 25,000 crore,” said Anuj Puri, Chairman, ANAROCK Property Consultants.
“The vexed problem of delayed and stalled real estate projects appears to have found a solution, with the Hon’ble Finance Minister announcing Cabinet Approval of the scheme to provide ‘last mile funding’ for such projects, which she had proposed earlier,” said Niranjan Hiranandani, MD, Hiranandani Group.
“This will go a long way in charting a path of faster revival. Policy reforms have ensured that the government role can be seen making the buyers feel at ease,” said Parveen Aggarwal, Founder & Chairman, Signature Sattva.
However, home buyers have pointed out to some of the measures that shoud have been taken in regard to the AIF. “It would have been better if homebuyers can be involved in the process of identification of projects and disbursement of funds” said Abhay Upadhyay, President, Forum for People’s Collective Efforts (FPCE).