Government creates 25,000 cr AIF to fund positive projects only
The finance minister Nirmala Sitharaman on Wednesday said that the government after holding discussion with Reserve Bank of India (RBI) has decided to create a special window provision for the Indian real estate sector. "We have to start in some way to give sustainable solutions to home buyers. The idea is to complete the projects as soon as possible and give it to home buyers so that maximum people can benefit," said Sitharaman. The government has decided to create an category-II Alternative Investments Fund (AIF) of about Rs 25,000 crore to start with. In this, about Rs 10,000 crore will be given by the government. The incomplete projects registered with RERA and are net worth positive will only be funded. "The idea is to provide last mile funding for incomplete units," said FM. The finance minister said that there are about 1,600 stalled projects in the country with 4.58 lakh incomplete housing units which will benefit with this fund. However only affordable homes will benefit for which the cap is yet to be decided. "For example the units which are under Rs 2 crore in Mumbai, Rs 1.5 crore in Delhi, Chennai, Bengaluru, Kolkata, Pune and Hyderabad and Rs crore and less in other cities might benefit. But the amount is yet to be fixed," added FM. "We have had discussion with SBI, LIC and few others to participate in the AIF. This is only an initial investment. Post this, several sovereign funds who have also expressed interest will be made part of this AIF," said the finance minister. A professional body will monitor the AIF who will release the amount only after assessing the project and construction status and ensure funds is utitilised for the project. "The whole amount will not go in the escrow account in one go. It will be released stage-wise depending on the construction status," said Sitharaman. The vexed problem of delayed and stalled real estate projects appears to have found a solution, with the Hon’ble Finance Minister announcing Cabinet Approval of the scheme to provide ‘last mile funding’ for such projects, which she had proposed earlier. The funds will be used to provide priority debt financing for the completion of stalled housing projects in the Affordable and Middle-Income Housing sector, providing relief to developers with unfinished projects as also ensuring delivery of homes to buyers, said Dr. Niranjan Hiranandani, President, NAREDCO and MD, Hiranandani Group. NAREDCO Vice Chairman & CMD Tulip Infratech Parveen Jain said, ' Today's announcement by the Finance Minister is a well thought of measure which shall take care of the funds for the stalled projects. The scheme of AIF ( Alternative Investment Fund) along with investments from various institutions amounting to huge corpus which shall be put in an escrew account is an outstanding step which shall prove to be a big boon and relief for the Real Estate sector.'
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