Finance Minister Nirmala Sitharaman post market hours on Wednesday announced several measures to support the troubled real estate sector and alleviate problems of homebuyers.
Key Highlights from the speech:
- The government has approved setting up of a Rs25,000cr bailout fund to finance 1,600 stalled housing projects to kickstart incomplete real estate projects.
- The government will establish a "special window" to offer priority debt financing for completion of stalled housing projects in the affordable and middle-income housing sector.
- An alternative investment fund (AIF) will be created. The government will put in Rs10,000cr and others, such as SBI and LIC, will create funds of Rs25,000cr in total.
- This investment will be used to complete housing units worth less than Rs2cr in Mumbai, Rs1.5cr in Delhi-NCR, Chennai, other metros, and Rs1cr in other cities.
- The fund size would increase as sovereign and pension funds are expected to participate in this AIF. The AIF can be utilized even by the projects which have been declared non-performing assets or are facing insolvency proceedings.
- only RERA-registered projects with positive networth will be provided funds.
- The AIF funds will be released in stages through an escrow account and will be contingent upon completion of the approved phase.
- The government and the Reserve Bank of India (RBI) are in the process of resolving the issues faced by the real estate sector, admitting that the issues facing the real estate sector have not been addressed fully resulting in a spillover effect on many sectors.
The FM said that the move would help relieve the financial stress faced by a large number of homebuyers and also release a large number of funds stuck in these projects for productive use in the economy.