In a major relief for home buyers, Union Finance Minister Nirmala Sitharaman on Wednesday announced that a 'special window' will be created by the government to provide priority debt financing for completion of stalled housing projects. Addressing a press conference after the meeting of the Union Cabinet, Sitharaman said that the financing will be provided in the affordable and middle-income housing sector.
According to Finance Minister, the creation of asset alternative fund (AIF) will benefit 1,600 stalled housing projects with 4.58 lakh homes. She added that a viable way has been discussed by the Reserve Bank of India (RBI) and its Governor to reach out to homebuyers. Sitharaman noted that the government will first fund Rs 10,000 crore and participation from State Bank of India (SBI) and Life Insurance Corporation of India will create an overall fund of Rs 25,000.
"An AIF (asset alternative fund ) 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 said.
"This investment will be used to complete housing units worth less than Rs 2 crore in Mumbai, Rs 1.5 crore in Delhi-NCR, Chennai, other metros, and Rs 1 crore in other cities," she added.
The Union Finance Minister noted that the main criteria to be covered under this scheme is that the net worth of housing project is positive. The real estate AIF will be managed by SBI Cap through an escrow account and SBI cap will prioritise the projects as per its viability.
On November 5 (Tuesday), Sitharaman had said that the government was holding regular consultations with the RBI in order to resolve the issues faced by the real estate sector. The Union Finance Minister had admitted that the real estate sector have been facing some serious issues and the time has come to address these issues fully because the slowdown in real estate sector has a spillover effect on other sectors too.
It is to be noted since August the Centre has been taking several steps to boost the economy. Recently, the government slashed corporate tax rate to 22 per cent in order to revive the market and boost consumption demand.