Real estate developers welcomed the government’s move to create a ₹25,000-crore fund to help complete over 1,600 stalled housing projects, saying it will solve the long-pending problem of homebuyers.
CREDAI (The Confederation of Real Estate Developers’ Associations of India) Chairman stated that the only criteria for eligibility are net worth positive projects.
This move, ensures that the fund is actually deployed to complete incomplete projects which are even NPA (non performing asset) or also in NCLT (National Company Law Tribunal).Majority of stuck homebuyers will benefit from the announcement of a ₹25,000 Crore stress fund which is going to be increased in value if needed.
NAREDCO (National Real Estate Development Council) President stated that the vexed problem of delayed and stalled real estate projects appears to have found a solution.
The announcement prove to be a win-win for both, home buyers and real estate developers, Implementation will take time.
The working on stalled Project move will go a long way in building confidence in the real estate sector not only from the end user perspective but also from an investors’ perspective.
The inclusion of projects under NPAs and NCLT (National Company Law Tribunal) into the gamut of eligible projects, albeit net positive projects, into the special window funding are a welcome decision.
The extension of this benefit to mid income beyond the affordable housing segment is a critical step forward. This will help create greater momentum in stock movement.
CREDAI (The Confederation of Real Estate Developers’ Associations of India) President stated that all developers have been enabled to rise above all challenges and complete their project without further delay.
These measures would have a wider impact by accelerating the much-sought investments, growth and above all employment.
Eminent Developers welcomed the move as this will provide relief to homebuyers as well as developers and boost housing demand.
The AIF 2 structure of the fund is a pass through for tax purposes.
The fund does not pay tax on its investment income and hence will facilitate the financing activities in a tax efficient manner.
Finance Minister stated that several sovereign funds have expressed interest in the scheme and may join at a later stage.
The Government announced Rs 25,000 crore fund for stalled real estate projects.
The decision was approved by the Union Cabinet in a meeting held under the chairmanship of Prime Minister Narendra Modi.
Finance Minister stated that the government will put in Rs 10,000 crore in this Alternative Investment Fund (AIF) while SBI and LIC would provide Rs 15,000 crore, taking the total size to Rs 25,000 crore. This will finance 1,600 stalled housing projects comprising 4.58 lakh housing units across the country.
The move is aimed at generating employment as well as reviving demand of cement, iron and steel industries. It is also aimed at relieving stress in the major sectors of the economy. The fund size would increase as sovereign and pension fund are expected to participate in this AIF. The AIF can be utilised even by the projects which have been declared non-performing assets or are facing insolvency proceedings.
Key Cabinet Decisions:
- Cabinet approves establishment of ‘Special Window’ to provide priority debt financing for completion of stalled housing projects in the Affordable and Middle-Income Housing sector.
- Government shall act as the sponsor of the fund and infuse funds up to Rs 10,000 Crore; Fund will provide relief to developers with unfinished projects and ensure delivery of homes to buyers. 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.
- The decision will also generate considerable employment, revive demand of cement, iron and steel industries, relieve stress in other major sectors of the economy
This Article is Written by Mr. Keval Tachak, Final Year Student of KES College of Law, Mumbai University
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