- The special window will also obtain investments from institutions like LIC and SBI, which will bring the corpus to Rs 25,000 crore.
- The measure is expected to encourage those who have been affected by stagnant housing projects and provide relief to a sector affected by the fall amid the slowdown in consumption.
- The finance minister also said that those projects that have been declared NPA by the banks and those that face bankruptcy proceedings under the NCLT but that were not remitted for liquidation will also be included in the scheme.
Relief for stressed homebuyers! Cabinet opens a window of Rs 25,000 million for stuck houses
NEW DELHI: The cabinet approved a special window of Rs 25,000 million to provide funds to housing projects of 2.83% NSE that are stagnant, with the aim of reviving the key sector, boosting the economy and providing relief to buyers of households. The money will be available for “positive net worth” projects, said FM Nirmala Sitharaman.
Up to 1,600 projects with 458,000 housing units will potentially be covered by the dispensation. The government will contribute Rs 10,000 crore and the rest will come from LIC and the State Bank of India, as well as sovereign wealth funds and pension funds.
“The creation of (a) a special window for affordable and middle-income housing projects would revive the real estate sector and generate considerable employment”
The government said in a statement, adding that this will cause job creation, as well as increased demand for cement, iron, and steel. “This initiative will also have a positive effect on stress release in other important sectors of the Indian economy.”
“RBI will issue an explanatory note”
Sitharaman was addressing journalists after a cabinet meeting chaired by Prime Minister Narendra Modi on Wednesday.
“This, in due course, will help relieve the financial stress faced by a large number of middle class homebuyers who have invested their earned money with such effort,” the government said.
Any project, regardless of the completion stage, will be eligible if its net worth is positive and it has the Real Estate Law (Regulation and Development) or the Rera registry, Sitharaman said.
He said the government had held detailed discussions with the banks and the Reserve Bank of India (RBI) about the management of unprofitable assets (NPA). The central bank will issue an explanatory note on the matter, he said.
Sitharaman had announced the fund on September 14 but had restricted himself to providing last-mile funds for projects that were not in bankruptcy court or that were already labeled as bad debts. These conditions have now relaxed after detailed consultations with homebuilders and homebuyers, he said.
A government official said the total value of homes that are stagnant is estimated at Rs 1.39 lakh crore and about Rs 55,000-80,000 crore will be needed to complete them.
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