`25K-cr rescue plan for realty

■ Centre okays rescue package for ailing real estate sector

In a relief for thousands of homebuyers, the Centre on Wednesday decided to create a pool of `25,000 crore, which would be used to complete over 1,600 stalled housing projects. Finance Minister Nirmala Sitharaman, however, said that only RERA-registered projects with positive networth will be considered for funding.

In a relief for thousands of homebuyers, the Centre on Wednesday cleared a furnd worth `25,000 crore which would be used to complete more than 1,600 stalled housing projects, including those which have been admitted under insolvency proceedings or declared as bad loans.

Finance minister Nirmala Sitharaman told reporters after the meeting of the union cabinet where the proposal was cleared, that the Alternative Investment Fund (AIF) will consist of `10,000 crore which would be Centre’s share, while the remaining amount would be provided by Life Insurance Corporation of India (LIC) and State Bank of India (SBI).

Being termed as a “special window” for incomplete housing projects, Ms Sitharaman had first mentioned about the fund on September 14.

Projects whose net worth is less and are almost near completion, could be assessed and if it is found that these can be completed in a limited span of time after infusion of funds, could be prioritised, official sources said.

She, however, said that only RERA-registered projects with positive networth will be provided funds, adding that the scheme is a modified version of the September 14 plan.

The key change is allowing the AIF to fund projects that lenders may have declared as non-performing assets (NPAs) or which have been dragged to the NCLT for insolvency proceedings.

The AIF funds will be released in stages through an escrow account and will be contingent upon completion of the approved phase, she said, adding the size of the fund may be increased with the participation of sovereign and pension funds.

The fund will be managed by SBI Caps.

Ms Sitharaman said the government is seized of the problem faced by homebuyers who are forced to pay EMIs on loans taken for buying homes but have not yet got possession and continue to shell out both loan installments and rent.

“The 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,” she added.