BusinessLine (Chennai)

Banks can fund stalled realty projects after RBI greenlight

THE BASE CASE. Only viable projects will be taken up through SWAMIH fund: Official

- Shishir Sinha New Delhi

Banks can fund stalled real estate projects after taking permission from the Reserve Bank of India, a senior Finance Ministry official has said. He also informed that SWAMIH (Special Window for Affordable and MidIncome Housing) fund corpus is yet to be fully utilised.

The Indian Banks’ Associatio­n (IBA) has estimated that 4.12 lakh stressed dwelling units involving ₹4.08lakh crore are impacted in various stalled real estate projects. About 2.40 lakh stressed dwelling units of this are situated in the NCR. If 75 per cent of these stressed units are resolved, it will add about three lakh units to the housing sector.

The resolution of these stressed units will assist the middle and lowermiddl­e class in getting houses for which they have already paid a substantia­l amount. In addition, it will provide a major

The Indian Banks’ Associatio­n has estimated that 4.12 lakh stressed dwelling units involving ₹4.08lakh crore are impacted in various stalled realty projects

impetus to economic activity and growth. A 14member committee chaired by former NITI Aayog CEO Amitabh Kant, which was constitute­d to examine stalled real estate projects and recommend ways to complete them, submitted its report on August 21 to the government. The committee concluded that the main reason for the stress in these projects was the “lack of financial viability”, which had led to cost overruns and time delays.

“We will take only those projects which could be made viable through the SWAMIH fund. The report has two parts. First, developers will be given money, if there is a stalled project, through the SWAMIH fund and banks can also put in money after taking permission from the RBI. Second, individual­s whose loan is stuck and can’t repay the money...for them also we have made provision to classify it [the loan] as standard asset,” the official said while adding that the fund corpus has not been fully utilised. The government claims SWAMIH is India’s largest social impact fund specifical­ly formed for completing stressed and stalled residentia­l projects.

₹15,530 CRORE RAISED

The fund is sponsored by the Finance Ministry and is managed by SBICAP Ventures Ltd. The Fund has no precedent or comparable peer in India or in the global markets. It has raised ₹15,530 crore so far with an aim to providing priority debt financing for the completion of stressed, brownfield, and Real Estate Regulatory Authority (RERA) registered residentia­l projects that fall in the affordable, midincome housing category.

As of March, SWAMIH has provided final approval to about 130 projects with sanctions worth over ₹12,000 crore. In three years since inception in 2019, the fund has completed 20,557 homes and aims to complete over 81,000 homes in the next three years across 30 tier 1 and 2 cities.

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TAKEN A BEATING.

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