The Central Government has directed banks to compile and share details of stalled housing projects eligible for the SWAMIH fund. Procedural delays were identified as a key reason for lower exposure of public sector bank projects in the fund. Lenders will share feasibility reports with the fund, which aims to complete stressed projects by providing finance. Over 25% of capital has been returned and more than 26,000 homes completed so far. Banks have also approached RBI seeking exemption from 2023 guidelines which restricted regulated entities' investments in funds like SWAMIH, to ensure its continued operations.
In a bid to accelerate the resolution and completion of stressed housing projects, the Central Government has directed banks to compile and share a comprehensive list of stalled legacy projects falling under the Special Window for Completion of Construction of Affordable and Mid-Income Housing Projects (SWAMIH) fund.
According to sources familiar with the matter, after thorough discussions with all stakeholders, it was revealed that procedural delays primarily contribute to the lower exposure of public sector bank (PSB) projects under the SWAMIH fund. An official emphasised that there are significant shortcomings in the existing regulatory mechanisms’ approach to resolving such projects.
Lenders are set to share feasibility reports with the fund, which aims to provide finance for the completion of stressed projects. As per recent data, SWAMIH-I has successfully returned over 25% of drawn capital to investors and completed more than 26,000 apartments.
This directive follows an amendment by the Insolvency and Bankruptcy Board of India, which prohibits liquidators from selling housing units already allotted and in possession as part of the liquidation process. Another executive involved in the deliberations highlighted the importance of sharing information on the progress of the SWAMIH fund with concerned stakeholders.
Earlier estimates by the Indian Banks' Association revealed that approximately 4,12,000 stressed dwelling units, totaling over USD 4.08 lakh crore, are affected by stalled real estate projects. A significant portion of these units, about 2,40,000, are in the national capital region.
Furthermore, banks have approached the Reserve Bank of India (RBI) seeking exemption for the SWAMIH fund from the December 2023 guidelines that restrict investments of regulated entities in alternate investment funds (AIF). The banks say that this move emphasises on the importance of regulatory support for the fund's continuity and operations.
Major sponsors of the fund include State Bank of India, Life Insurance Corporation of India, and HDFC.
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