25,000 Cr Fund by the government brings in new ray of hope for stalled housing project

25,000 Cr Fund by the government brings in new ray of hope for stalled housing project
New Delhi: - 25,000 Cr fund announcement by the government for the stalled project is despite relief for
stalled housing projects. This plan intends to complete more than 1,600 stalled projects that even included
the plans that are in bad loans accounts or insolvency proceedings. The main reason of announcing this
plan was to see the boost in real estate segments and its associated sectors.
Nirmala Sitharaman also stated that the Alternative Investment Fund would be of 10,000 crore and
remaining 15,000 Cr. will be from State insurer LIC and the country’s lending leader State Bank of India
(SBI). A special consideration will be given to affordable and lower level income projects. The employment
rate will also boomingly increase because this plan is willing to complete more than 4.58 housing units.
With this purpose the demand for Cement, steel and iron industries will also be revived.
In this plan the RERA registered projects with positive net worth the funds will be provided only for
those. The payout of the funds will be stages and in escrow account the funds will be kept. All the
monitoring and management of funds will be done by SBI Caps. This plan intends to solve off long
intending problems of people. A welcoming change for the fruitful future can now be seen.
How Rs. 25000 Cr. Funds for incomplete flats will work 10 pointers:
1) Finance minister Nirmala Sitharaman had in September announced that a special window for
affordable and middle-income housing will be created for providing last-mile funding for incomplete
housing projects. But it had barred projects that have been declared as NPAs or non-performing assets
or are facing bankruptcy proceedings.
2) However, the government has now removed those conditions. Even if a housing project has been
declared non performing asset but liquidation has not been announced will be eligible to benefit from
this fund.
3) This fund will cover incomplete projects where unit cost or flat cost is less than ₹2 crore in Mumbai,
less than ₹1.5 crore in NCR, Chennai, Kolkata, Hyderabad, Bengaluru, Ahmadabad, Pune and less than ₹1
crore in rest of the country
4) Another condition is that the projects need to be registered under RERA or Real Estate Regulation and
Development Act and their net worth (cash flows minus project cost) should be positive.
5) The fund will release funds to developers in stages through an escrow account.
6) This means funds can only be utilized for completion of the project.
7) The banks cannot recover their earlier loans from this fund. The fund will be only used for completion
of the project, said the finance minister.
8) The fund will give priority to projects that are near completion. The finance minister cited an example
to explain the working of the fund. Say, a project which has three towers and Tower 1 has been 70%completed, Tower 3, 50% completed and work on Tower 2 has not started. The fund will give priority to
Tower 1 and then Tower 3. Tower 2, where work has not been started, will not get funding.
9) The finance minister said that the government is seized of the problem faced by homebuyers who are
forced to pay EMIs on loans taken for buying homes but have not yet got possession and continue to
shell out both loan installments and rent. The RBI will soon issue a note so that home buyers who had
stopped paying EMIs can regularize payments.
10) Analysts have welcomed the setting up of this fund. "The proposed fund is better than the earlier
one since this also includes projects referred to NCLT. This will be beneficial not only to the stressed real
estate sector but also to the home finance and NBFCs which have lent to developers