'Rs 25k crore as AIF for 1,600 halted housing projects'

Seeking to rescue lakhs of distressed home buyers, the Union Cabinet on Wednesday approved creation of a Rs 25,000-crore fund and tweaked certain norms that will help builders complete stalled projects even if they are facing bankruptcy or have been declared NPAs.

Finance Minister Nirmala Sitharaman said the government’s study has shown that over 1,600 projects are stalled across the country with 4.58 lakh housing units stuck in them.

Housing projects of developers like Amrapali, Jaypee Infratech, Unitech and a host of others have either been dragged to the National Company Law Tribunal (NCLT) for insolvency or have been declared non-performing assets.

The decision is expected to give a major boost to the slowing economy by lifting the output of key infrastructure sectors such as cement, steel, electricity, natural gas and coal that help raise industrial production and act as major inputs in the housing sector.

Government data released last week had shown the production of these sectors had declined more than 5%, putting up the worst show in nearly 14 years.

India’s largest public sector lender State Bank of India and LIC too have contributed in the fund, which is also open for other sovereign funds to invest in them.

“An asset alternative fund (AIF) will be created. The government will put in Rs 10,000 crore and others, such as SBI and LIC, will create funds of Rs 25,000 crore in all,” Sitharaman told reporters after the Cabinet meeting.

She, however, did not give any timeline to set up the fund.

The fund, to be registered with Securities and Exchange Board of India, will be entrusted to professional investment managers under a special window, which in turn will provide money to stalled housing projects.

“This will ensure delivery of homes to a large number of home-buyers and in due course help relieve financial stress faced by those who have invested their hard-earned money,” the minister said, adding the move will not only revive the real estate sector but also generate large scale employment.

Sitharaman had last month announced creation of such a fund but had put two conditions — the housing projects should be non-NPAs and should not have been dragged to NCLT for insolvency proceedings. These two conditions were dropped on Wednesday, allowing housing projects under NPA and NCLT too to access funds.

“This move couldn’t have come at a better time because the delay was causing serious apprehensions that stuck and delayed projects had remained unaddressed so far. The timeline for setting up this fund and its actual implementation are quite critical,” property brokerage firm Anarock said, welcoming the move.