The move will help relieve financial stress faced by large number of middle-class homebuyers who have invested their hard-earned money.
New Delhi: In a relief to thousands of homebuyers, the Centre on Wednesday cleared a fund of Rs 25,000 crore which would be used to complete more than 1,600 stalled housing projects across the country, inclu-ding those which have been admitted under insolvency proceedings or declared as bad loans.
The move is likely to help 4.59 lakh housing units across the country and is likely to generate employment as well as revive demand of cement, iron and steel industries.
Finance minister Nirmala Sitharaman told reporters after the meeting of the Union Cabinet where the proposal was cleared, that the Alternative Investment Fund (AIF) will consist of `10,000 crore which would be the Centre’s share, while the remaining amount would be provided by Life Insurance Corporation of India (LIC) and the State Bank of India (SBI).
Termed as a “special window” for incomplete affordable and middle-lower income housing projects, Ms Sitharaman had first mentioned the fund on September 14.
“This investment will be used to complete housing units worth less than `2 crore in Mumbai, `1.5 crore in Delhi-NCR, Chennai, other metros, and `1 crore in other cities,” Ms Sitharaman said.
Projects whose net worth is less and are near completion, could be assessed and if it is found that these can be completed in a limited span of time after infusion of funds, could be prioritised, official sources said.
Ms Sitharaman, however, said that only RERA-registered projects with positive networth will be provided funds, adding that the scheme is a modified version of the September 14 plan.
The key change is allowing the AIF to fund projects that lenders may have declared as non-performing assets (NPAs) or which have been dragged to the NCLT for insolvency proceedings.
The AIF funds will be released in stages through an escrow account and will be contingent upon completion of the approved phase, she said, adding the size of the fund may be increased with the participation of sovereign and pension funds.
The fund will be managed by SBI Caps.
Ms Sitharaman said the government is seized of the problem faced by homebuyers who are forced to pay EMIs on loans taken for buying homes but have not yet got possession and continue to shell out both, loan instalments and rent.
“The 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,” she said.