The Union Cabinet has approved formation of a bailout fund worth Rs 25,000 crore to finish stalled housing projects in the country. Talking to media after the Cabinet meeting on Wednesday, Finance Minister Nirmala Sitharaman said that the government has approved forming a special window which is to be structured as an alternative investment fund. The government will infuse Rs 10,000 crore in the relief fund.
"Government will give Rs 10,000 crore. We have already spoken with institutions like SBI, LIC and so on, who together will also put money which will touch Rs 25,000 crore. This will be kept open. Several sovereign funds have also expressed interest to come into it. Gradually, we will keep adding to the AIF corpus," the Finance Minister said.
The fund will be managed by SBI Capital and target 4.58 lakh residential units pending in 1,600 housing projects. Funds from AIF will be released in tranches via an escrow account depending on the completion of the approved phase. Only RERA-registered projects with positive net worth can avail the benefits of this fund.
Moreover, project managers will assess the project to determine the time needed to complete it. The funds extended to promoter of stalled projects will be responsible to complete it and deliver the homes to homebuyers, FM Sitharaman. The funds in escrow account cannot be touched even by banks to settle pending dues of a builder, she further said.
The Finance Minister announced that builders who have been declared NPA, or have been deemed not worthy for liquidation by NCLT, can also benefit from the Rs 25,000 crore fund. The risk assessment ahead of this has already been worked out with the banks, said Sitharaman.
On September 14, 2019, Sitharaman had announced a special window to support stressed housing projects in affordable and middle-income segment with last mile funding. Later on, 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 homebuyers, developers, lenders, and investors were ascertained that could be addressed through the special window.