Banks empowered to revive stalled real estate ventures

31 Aug 2023 CW Team

Approximately 4.12 lakh distressed housing units, involving Rs 4080 billion, languish in halted real estate projects, according to the Indian Banks’ Association (IBA). A significant proportion, around 2.40 lakh units, are situated in the National Capital Region (NCR). Addressing 75 per cent of these challenges could introduce three lakh housing units, catering to the middle and lower-middle class, providing momentum to the economy and promoting growth.

A committee, led by former NITI Aayog CEO Amitabh Kant, investigated stalled real estate ventures and presented its findings on August 21. The report identified "lack of financial viability" as the root cause behind these challenges, leading to cost overruns and delays.

"We will consider projects feasible through the SWAMIH Fund. Developers with stalled projects will receive funds through SWAMIH, while banks can also invest with RBI approval. Additionally, provisions have been made to classify stuck loans as standard assets," stated the official, underscoring the fund's partial utilisation.

SWAMIH, heralded as India's largest social impact fund dedicated to revitalising struggling residential projects, remains underutilised. Managed by SBICAP Ventures and sponsored by the Finance Ministry, the fund has raised Rs 155.3 billion so far. It targets priority debt financing for completing stressed, brownfield, and Real Estate Regulatory Authority (RERA) registered affordable and mid-income housing projects.

As of March, SWAMIH greenlit about 130 projects, approving over Rs 120 billion. In its three-year span since inception in 2019, the fund has finished 20,557 homes and aims to complete over 81,000 more in the next three years, spanning 30 tier 1 and 2 cities.

The Finance Ministry underscores the fund's effective management, evidenced by 26 completed projects and generated returns for investors, unlocking liquidity exceeding Rs 350 billion and stimulating ancillary industries in real estate and infrastructure sectors.

Banks are poised to breathe life into stagnant real estate ventures upon Reserve Bank of India's (RBI) consent, affirms a senior Finance Ministry official. He also highlights the underutilisation of the Special Window for Affordable and Mid-Income Housing (SWAMIH) fund's corpus.Approximately 4.12 lakh distressed housing units, involving Rs 4080 billion, languish in halted real estate projects, according to the Indian Banks’ Association (IBA). A significant proportion, around 2.40 lakh units, are situated in the National Capital Region (NCR). Addressing 75 per cent of these challenges could introduce three lakh housing units, catering to the middle and lower-middle class, providing momentum to the economy and promoting growth.A committee, led by former NITI Aayog CEO Amitabh Kant, investigated stalled real estate ventures and presented its findings on August 21. The report identified lack of financial viability as the root cause behind these challenges, leading to cost overruns and delays.We will consider projects feasible through the SWAMIH Fund. Developers with stalled projects will receive funds through SWAMIH, while banks can also invest with RBI approval. Additionally, provisions have been made to classify stuck loans as standard assets, stated the official, underscoring the fund's partial utilisation.SWAMIH, heralded as India's largest social impact fund dedicated to revitalising struggling residential projects, remains underutilised. Managed by SBICAP Ventures and sponsored by the Finance Ministry, the fund has raised Rs 155.3 billion so far. It targets priority debt financing for completing stressed, brownfield, and Real Estate Regulatory Authority (RERA) registered affordable and mid-income housing projects.As of March, SWAMIH greenlit about 130 projects, approving over Rs 120 billion. In its three-year span since inception in 2019, the fund has finished 20,557 homes and aims to complete over 81,000 more in the next three years, spanning 30 tier 1 and 2 cities.The Finance Ministry underscores the fund's effective management, evidenced by 26 completed projects and generated returns for investors, unlocking liquidity exceeding Rs 350 billion and stimulating ancillary industries in real estate and infrastructure sectors.

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