The government has set up an distressed alternative investment fund (AIF) of Rs.25,000 crore to boost stalled housing projects in the affordable and middle-income housing sector including the projects tagged as non-performing assets(NPA).
Funds for distressed assets are category II AIFs, which invest in stressed assets of various companies, with the investment philosophy that not all NPAs are bad assets and a turnaround in these will provide a good return.
The Finance Minister Nirmala Sitharaman had announced in a press conference that the government would infuse up to Rs.10,000 crore in this fund while State Bank of India and LIC would provide Rs.15,000 crore.
The objective is to help developers in completing the unfinished projects that were halted due to a lack of funds. About 1,600 stalled projects with 4.58 lakh incomplete housing units are expected to benefit from this fund.
The fund will be professionally managed and the money will be allotted in an escrow account that will be released to the developer in different stages depending on the completion of projects
“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,” the government said in a press release.
Projects in the NCLT or the ones considered as non-performing association (NPA) will also be covered under this scheme. However, the projects should be net positive to avail of these benefits.