Modi Govt Plus: Rs 25,000 Cr boost to housing sector

Union Finance Minister Nirmala Sitharaman’s announcement that the Government will be setting up an Alternative Investment Fund of Rs 25,000 Cr to revive the housing sector has come in for much praise.  The establishment of the Special Window to “provide priority debt financing for completion of stalled housing projects in the affordable and middle-income housing sector” is big, commentators have said.  

The criteria that a project has to meet to be eligible for funding are: Net-worth positive; Affordable and middle-income housing project; On-going projects registered with RERA; Reference by the existing lender; Will include stressed projects classified as NPAs and those in NCLT. 

Of the Rs 25,000 Cr pool, the government will contribute Rs 10,000 Cr.  The rest will come from SBI, LIC and other financial institutions.  

Says columnist R Sriram, “All projects below Rs 2 Cr in metros and below Rs 1 Cr in non-metros to be covered. Projects need to be just 30% complete. The earlier announcement seems to create the impression that it will not cover projects that are NPA and that are up to 60% complete. RBI to soon issue a clarificatory note on regularising accounts under the scheme! This is good news for real estate and NBFCs.”