Cabinet approves special window for funding of stalled affordable and middle-income housing projects
GN Bureau | November 7, 2019
The real estate sector is arguably the most representative of the slowdown in the economy. The government has moved to offer it a helping hand with a Rs 10,000 crore package, which has the potential of lifting the sagging fortunes of a large number of allied industries.
The union cabinet on Wednesday approved the establishment of a ‘Special Window’ fund to provide priority debt financing for the completion of stalled housing projects that are in the ‘affordable and middle-income housing’ sector.
For the purposes of the fund, the government shall act as the sponsor and the total commitment to be infused by it would be up to INR 10,000 crore, an official note said. The fund will be set up as a Category-11 Alternate Investment Fund (AIF) debt fund registered with SEBI and would be professionally run. For the first AIF under the Special Window, it is proposed that SBICAP Ventures Limited shall be engaged to be the Investment Manager.
This fund would in turn provide relief to developers that require funding to complete a set of unfinished projects and consequently ensure delivery of homes to the home buyers.
Since the real estate industry is intrinsically linked with several other industries, growth in this sector will have a positive effect in releasing stress in other major sectors of the Indian economy as well.
Finance minister Nirmala Sitharaman had on September 14 announced that a special window for affordable and middle-income housing will be created. This special window will provide last mile funding for housing projects which are stressed.
Subsequently, Inter-ministerial consultations and several stakeholder consultations were held with the housing industry including housing finance companies, banks, NBFCs, investors, and real estate developers. Problems being faced by home buyers, developers, lenders, and investors were ascertained that could be addressed through the special window.
Covid-19 may turn out to be the last straw that broke the camel’s back so far as the real estate sector is concerned. It broke out at a time when pundits were estimating the GDP to be hovering around 2.5% with unprecedent levels of unemployment. This itself was a good indicator that the real estate s
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