Govt’s boost to clear housing projects will incentivise buyers: LIC Housing
The Centre’s decision to set up a ~25,000-crore alternative investment fund (AIF) to revive stalled housing projects across top cities will help improve the real estate market. It will also instill confidence in the minds of home buyers, said Siddhartha Mohanty, managing director (MD) and chief executive officer (CEO) of LIC Housing Finance (HFL).
The company is expecting to disburse around ~55,000 crore this year against last year’s ~48,000 crore and the market is seeing signs of growth, he added.
Speaking to reporters on the sidelines of the inauguration of LIC HFL’S exclusive housing property fair Ungal Illam 2019, he said: “I am thankful that the government has addressed the long-pending issue, a necessity for this sector. It will give further funding to stalled projects, which are non-performing assets (NPAS), subject to conditions, including that 60-70 per cent projects should have been completed. Houses should be in the affordable segment; and they have also limited the cost based on the location. Most projects within those conditions will be completed with this support.”
Of the total fund, an AIF of ~10,000 crore will be given by the government while the rest will be from LIC and the State
Bank of India. Commenting on the exposure of LIC HFL in stalled projects, he said: “We have taken data on the exposure to stalled projects, and it will be less than ~1,200 crore. We are in talks with developers and expect this will help us reduce NPAS. However, it will take time as project completion is not an easy task.”
It will definitely improve the market and is aimed at instilling confidence in the minds of home buyers, he added.
The Union Cabinet, in the first week of this month, approved setting up of the AIF to revive around 1,600 stalled housing projects across top cities in the country.
The AIF will be a special window to provide priority debt financing for completion of projects in the affordable and middle-income categories, Finance Minister Nirmala Sitharaman said after the Cabinet meeting.
Mohanty said the housing sector, especially the affordable segment, is showing signs of growth. This year, the company has so far disbursed around ~25,000 crore. Most of the growth this year is expected to come from affordable housing and commercial loan against property (LAP).
The Pradhan Mantri Awas Yojana has constituted 26 per cent of the portfolio this year, while the commercial LAP and the developer book is at 7 per cent of the overall disbursement.