Banks in India Instructed to Push Stuck Budget Housing Projects Worth INR 3L crore

New Delhi, India

The Government of India is urging banks to use the'special window' it has opened up to expedite the completion of large-scale real estate projects worth more than 3 lakh crore.

So far, the Special Window for Completion of Affordable and Mid-income Housing (SWAMIH) Investment Fund has only taken on two bank-funded projects.

The government wants to expedite the resolution of such stalled projects as per sources.

In the last two months, at least three rounds of discussions with all parties have been conducted to iron out any concerns and guarantee optimal coordination. According to the most recent statistics, the SWAMIH Fund has authorised 131 projects totaling 13,600 crore.

The government established the fund in 2019 to assist in the completion of delayed housing projects. SBI-CAP Ventures manages the Special Window, which is organised as an alternative investment fund (AIF).The investment fund must put more bank-led projects on track.

Most banks have agreed to provide the SWAMIH Fund first or senior charge over the section of the project for which the fund's funds will be utilised. SWAMIH offers money to stressed or delayed housing projects only when the capital given by the fund has a senior charge, unless a regulatory body has first charge. The first charge holder has the option to sell the security in order to satisfy its obligation before the other creditors.

This was discovered to be one of the roadblocks because lenders were initially hesitant to relinquish the first charge, but now most of them are on board as per another source. 

According to a bank official, lenders have also requested permission from the banking regulator, the Reserve Bank of India, for any new financing for such projects to be deemed regular loans.

In some cases, such loans have turned into non-performing assets, and under existing regulations, they require more provisioning than standard assets.

SWAMIH funds only projects having a positive net value at the moment.