The government is pushing to accelerate the completion of stalled housing projects by directing banks to list these unfinished endeavors. The initiative is part of the SWAMIH fund’s strategy to address the slow progress of affordable and mid-income housing projects that have hit roadblocks.
Officials familiar with the situation cite procedural delays as a major hurdle preventing public sector bank projects from benefiting from the SWAMIH fund. They note a need for a more effective approach beyond current regulatory measures to resolve these stalled projects. Despite the SWAMIH fund’s successes, scaling its efforts remains a challenge due to the sheer volume of incomplete projects.
Banks are expected to provide their feasibility studies to the fund, which aims to finance the completion of these stressed projects. To date, the SWAMIH-I fund has repaid more than 25% of its drawn capital to investors and has completed over 26,000 apartments.
This move comes after the Insolvency and Bankruptcy Board of India updated its regulations to prohibit the sale of housing units that have already been allotted and are in possession, as part of the liquidation process. Officials also recommend that updates on the SWAMIH fund’s progress be shared with all stakeholders to improve transparency.
The Indian Banks’ Association previously estimated that about 412,000 stressed housing units, involving 4.08 lakh crore rupees ($50.6 billion), are affected by stalled real estate projects. Nearly 240,000 of these units are in the National Capital Region, according to a report by a committee led by former NITI Aayog CEO Amitabh Kant.
In related developments, banks have petitioned the Reserve Bank of India for an exemption from December 2023 guidelines that limit investments by regulated entities in alternative investment funds (AIFs). These guidelines restrict investments in AIFs that directly or indirectly invest in companies to which the regulated entity has also lent or invested. Banks argue that the SWAMIH fund, sponsored by the government and backed by major entities such as the State Bank of India, Life Insurance Corporation of India, and HDFC, should be exempt to avoid potential disruptions to its operations.
(Credits: ET realty)
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