India approves special window for funding of stalled affordable, middle-income housing projects

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NEW DELHI: The Union Cabinet chaired by Prime Minister of India Narendra Modi on Wednesday approved the establishment of a ‘Special Window’ fund to provide priority debt financing for the completion of stalled housing projects that are in the Affordable and Middle-Income Housing sector.

For the purposes of the fund, the government shall act as the Sponsor and the total commitment to be infused by the Government would be upto Rs 10,000 crore.

The fund will be set up as a Category-11 AIF (Alternate Investment Fund) debt fund registered with SEBI and would be professionally run.

For the first AIF under the Special Window, it is proposed that SBICAP Ventures Limited shall be engaged to be the Investment Manager.

This fund would in turn would provide relief to developers that require funding to complete a set of unfinished projects and consequently ensure delivery of homes to the home-buyers.

The corpus size of the AIF would be scaled up to Rs 25,000 crore after SBI and LIC pump in funds. It would grow further in the coming days with the addition of sovereign wealth funds and pension funds.

The AIF would meet fund requirements of 1,600 stalled projects where money of 4.58 lakh homebuyers are stuck, Finance Minister Nirmala Sitharaman said briefing the media after Cabinet meeting.

The Special Window will also cover projects that are classified as NPA or where NCLT proceedings have already started but with the rider that they meet other eligibility criteria. Some of the conditions for getting the last-mile funding are projects being networth positive, registered with RERA and falling in the category of affordable and middle-income housing project.

Department of Economic Affairs secretary Atanu Chakraborty said that networth positive clause will be applied project-wise taking into account cash flows and total project cost and not at the corporate level.

This would mean even projects being undertaken by now bankrupt Amrapali and Jaypee Group could qualify for funding depending on the completion status.

Anticipating realty sector booster from the government, the Indian stock market on Wednesday surged to record levels. It may touch a new peak tomorrow, bolstering realty sector stocks.

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 Finance Minister Nirmala Sitharaman on September 14, 2019 had announced that a special window for affordable and middle-income housing will be created. This special window will provide last mile funding for housing projects which are stressed.

Subsequently, Inter-ministerial consultations and several stakeholder consultations were held with the housing industry including Housing Finance Companies, Banks, NBFCs, Investors, and Real Estate Developers. Problems being faced by home buyers, developers, lenders, and investors were ascertained that could be addressed through the Special Window.

Fund created under the Special Window will be setup as priority debt funds. A detailed Investment Policy will be laid down to guide the selection of projects to be financed through a detailed due-diligence process that will include legal due-diligence, title due diligence, micro-market analysis, financial analysis etc.

“The final decision will be taken by the Investment Committee of each fund comprising experienced professionals and industry experts. The Investment Committee will approve individual deals independently as per Investment Policy ensuring alignment with investment objectives of the Fund,” the statement said.

Sitharamn also said that RBI has also issued a clarificatory note that would allow banks to release pending loan amounts of home buyers whose money has got stuck in stalled projects.

In order to give a boost to crisis-hit real estate sector, the government has in the last few months announced a slew of measures. It has provided additional deduction up to Rs 1,50,000 of interest paid on loans borrowed up to March 31, 2020 for purchase of houses valued up to Rs 45 lakh.

The interest rate on House Building Advance has also been lowered and linked with the 10 Year G Sec Yields to encourage more government servants to buy new houses among other key measures.