25,000 Crore Fund for Real Estate

Considering banks have turned completely averse to funding real estate or infrastructure (ICICI has shut down its project finance division that funded infrastructure), the announcement of a Rs 250 billion fund is a lifeline. This should address most of the financial requirements (estimated to be Rs 550 billion to Rs 800 billion) of the stalled projects in real estate particularly those in the affordable housing segment. Funding from NBFCs has shown a 73% decline in the first half of 2019.

Given the above, an Alternative Investment Fund (AIF) where the Government contributes Rs 100 billion while SBI & LIC contribute Rs 150 billion has been initiated by the government to be managed by SBI Capital and targets 4.58 lakh residential units pending in 1,600 housing projects (value under Rs 2 cr in Mumbai, for Delhi/NCR, Chennai, Pune, Hyderabad, Kolkata at Rs 1.5 cr and under Rs 1 cr in other cities). Funds from the AIF will be released in tranches via an escrow account depending on the completion of the approved phase for RERA-registered projects.

Unsold inventories in 9 major cities stood at of 7,00,000 units. Of this total unsold housing stocks, 4,00,000 units were in the affordable segment.

Guest Author:
Mr. Pratap Padode,
Founder & Executive Director, First Construction Council
Linkedin: https://www.linkedin.com/in/pratappadode/
(FIRST CONSTRUCTION COUNCIL (a non-profit trust formed in 2003) aims to be the comprehensive source for all information needs of the construction companies and the industry's stakeholders, the catalyst for adopting best practices, the torchbearer for all policy initiatives needed to enhance the importance and welfare of the industry and be the industry's unified voice.)

News Source: https://economictimes.indiatimes.com/markets/stocks/news/rs-25000-crore-fund-real-estate-sector-may-finally-come-out-of-stress-say-experts/articleshow/71943409.cms