₹25,000 crore fund for pending housing projects: All you need to know

₹25,000 crore fundpending housing projects FAQs, SBI — Image Source : FILE
₹25,000 crore fund for pending housing projects: All you need to know

In a massive move to rescue home buyers, the government of India created a Rs 25,000 crore alternative investment fund (AIF) to complete some pending 1600 projects (4.58 lakh) housing units spread across the country, mainly Delhi-NCR, Mumbai, Chennai, Kolkata, Bengaluru, Ahmedabad and Pune. This has given cheer to lakhs of home buyers who had lost hope and were stuck in court cases against the builders.

IndiaTvNews.com tries to simplify things for homebuyers who are hoping a positive outcome from this big move by the Modi government. There are several questions that frequently come to the mind: Which housing projects qualify for the scheme? How is government going to implement this? Is there any upper cap for homebuyers? Will the rules be same in Pune and Mumbai? What if your builder has not got a RERA certificate? Is RERA must for your project/home unit to qualify for the government scheme?

Those incomplete projects will be covered, where unit cost is:

Less than Rs 2 crore in Mumbai
Less than Rs 1.5 crore in NCR, Chennai, Kolkata, Hyderabad, Bengaluru, Ahmedabad, Pune
Less than Rs 1 Crore anywhere else in India.
The two earlier conditions that, a project should not be Non-Performing Asset (NPA) and non-National Company Law Tribunal (NCLT) can only benefit, has been withdrawn.
Even if a project has been declared Non-Performing Asset but liquidation has not been announced, it will be eligible for this provision.

Where will the money for AIF come from?

The government of India will invest ₹10,000 crore in the fund. The balance ₹15,000 crore will come in from State Bank of India (SBI), Life Insurance Corporation of India (LIC) and other such institutions. The fund will be set up as a Category-11 AIF (Alternate Investment Fund) debt fund registered with SEBI and would be professionally run.

How will these realty funds be managed?

SBICAP Ventures Ltd. will be the investment manager and decide the priority of projects.
The money will be put in an Escrow account and will not go directly to the developers.
Banks cannot recover old dues from this amount.
RBI has also issued a clarificatory note that it would allow banks to release pending loan amounts of home buyers whose money has got stuck in stalled projects.
The Alternative Investment Fund (AIF), which was first announced by Finance Minister Nirmala Sitharaman on September 14, will act as a 'special window' to provide loans to over 1,600 incomplete affordable and middle-lower income housing projects.

IS RERA Mandatory for the housing project to qualify for the govt funding?

Yes. Union Finance Minister Nirmala Sitharaman made it clear on Wednesday that the projects need to be registered in RERA (Real Estate Regulation and Development Act).

The project's net worth should be positive. But even if the project has been declared an NPA or dragged to NCLT but not asked for liquidation, it will will also benefit.

Appreciating the government's decision, Kiran John, Joint Managing Director, Terapact said, "This will create a new avenue of relief and will help restore some buyer confidence. Most of the benefit will be felt in Mumbai and NCR."

"One question still unanswered is whether the programme will be expanded to include a wider range of eligible projects, as the current definition does limit the inclusion of a vast number of projects that could benefit demand in the affordability segment has been strong and in several cases sufficient to fund cash flow issues already. Badly planned and executed projects may need to resort to heavy discounts to sell inventory even with this help. Overall buyer sentiment will improve knowing that the government is rolling out a concrete plan to boost the sector and a consolidated effort has already been put into motion," Kiran John added.

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