In a major boost to the housing and real estate sector, the government on Wednesday approved setting up of a Rs 25,000 crore bailout fund to finance 1,600 stalled housing projects, finance minister Nirmala Sitharaman said.
The move will benefit many homebuyers who put in their hard-earned money to buy houses but have not received possession as their project got stuck due to non-availability of funds.
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Nirmala Sitharaman said the government will put in Rs 10,000 crore in this alternative investment fund (AIF) and State Bank of India (SBI) and Life Insurance Corporation (LIC) will also contribute Rs 15,000 crore, taking the total fund amount to Rs 25,000 crore.
Sitharaman said there are over 1,600 stalled housing projects with 4.58 lakh homes to benefit from this fund.
The decision was approved by the Union Cabinet at a meeting held on Wednesday under the chairmanship of Prime Minister Narendra Modi. The fund size would increase as sovereign and the pension fund is expected to participate in this AIF.
The move is aimed at generating employment as well as reviving demand of cement, iron and steel industries. It is also aimed at relieving stress in major sectors of the economy.
Sitharaman said that the fund will also help projects which have been declared non-performing assets (NPAs) by the banks or are facing insolvency proceedings provided their net worth should be positive.
Alternate investment fund (AIF) will provide priority debt financing for completion of stalled affordable, middle-income housing projects, she said. SBICAP Ventures will manage the real estate AIF with an escrow account.
Sitharaman said that Rs 25,000 cr alternate fund will be provided to stalled projects in phases.
This fund would provide relief to developers that require funding to complete a set of unfinished projects and consequently ensure delivery of homes to the home-buyers, the government release said.
Since the real estate industry is intrinsically linked with several other industries, growth in this sector will have a positive effect in releasing stress in other major sectors of the Indian economy as well, it said.
With inputs from agencies
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Updated Date: Nov 08, 2019 19:17:51 IST