The Modi government on Wednesday announced Rs 25,000 crore fund for stalled real estate projects. The decision was approved by the Union Cabinet at a meeting held on Wednesday under the chairmanship of Prime Minister Narendra Modi. Finance Minister Nirmala Sitharaman said the government will put in Rs 10,000 crore in this alternative investment fund (AIF) while SBI and LIC would provide Rs 15,000 crore, taking the total size to Rs 25,000 crore. This will finance 1,600 stalled housing projects comprising 4.58 lakh housing units across the country.
The move is aimed at generating employment as well as reviving demand of cement, iron and steel industries. It is also aimed at relieving stress in the major sectors of the economy. The fund size would increase as sovereign and pension fund are expected to participate in this AIF. The AIF can be utilised even by the projects which have been declared non-performing assets or are facing insolvency proceedings.
Key Cabinet decisions:
- Cabinet approves establishment of 'Special Window' to provide priority debt financing for completion of stalled housing projects in the Affordable and Middle-Income Housing sector.
- Government shall act as the sponsor of the fund and infuse funds up to Rs 10,000 Crore; Fund will provide relief to developers with unfinished projects and ensure delivery of homes to buyers. Move will help relieve financial stress faced by large number of middle-class homebuyers who have invested their hard-earned money; This will also release large amount of funds stuck in these projects for productive use in economy.
- The decision will also generate considerable employment, revive demand of cement, iron and steel industries, relieve stress in other major sectors of the economy
Special Window to provide last mile funding to projects meeting these criteria:
●Affordable & middle-income housing project
●On-going projects regd with RERA
●Reference by existing lender
●include stressed projects classified as NPA & NCLT