FAQs on Special Window for stalled projects

The Real Corner is listing out some important FAQs hereunder

What is role of the Government and the Investment Managers in this Special Window?

The Government shall act as the sponsor to the proposed fund and shall have the authority and responsibility as specified under SEBI (AIF) Regulations, 2012. Whereas, the investment manager is responsible for fund raising, investments and managing the fund team.

What is size of the fund?

The total commitment of funds to be infused by the Government in the affordable and middle-income group housing sector through the Special Window would be up to INR 10,000 cr.

The fund is seeking matching contributions from Banks, LIC and others to generate a total corpus of around Rs 25,000 cr.

Who will manage the fund?

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

Will Projects under NPA and NCLT be considered for the last mile funding?

Based on the inputs received from the stakeholders the Government has decided to increase the scope of investments to include NPA as well as NCLT projects.

All applications for financing would be reviewed by the investment committee of the fund for approval, after due-diligence and discussions with existing lenders and legal advisors.

Will this fund invest in cases which are pending before the High Courts and the Supreme Court?

No. The focus of this Special Window will be on the projects that are stalled for lack of construction funding.

It shall also look at projects that are NPAs or undergoing NCLT proceedings, that can commence construction immediately after funds are made available.

What will be the criteria for the selection of the projects for funding?

Funding shall be provided to the projects that meet the following criteria:

♦ Stalled for lack of adequate funds

♦ Affordable and middle-income category

♦ Net worth positive projects (including NPAs and projects undergoing NCLT proceedings)

♦ RERA registered

♦ Priority for projects very close to completion.

What is affordable and mid-income housing project?

For the purposes of the first fund under the Special Window, affordable or mid-income housing shall be defined to include any housing projects wherein housing units (to be specified in detail in the fund documents) do not exceed 200 sq. m. RERA carpet area and are priced as below:

♦ Upto or less than Rs 2 crore in Mumbai Metropolitan Region

♦ Upto or less than Rs 1.5 crore in National Capital Region, Chennai, Kolkata, Pune, Hyderabad, Bangalore and Ahmedabad

♦ Upto or less than Rs 1 crore in the rest of India.

What is a net-worth positive project?

Net-worth positive projects for the purpose of funding through the Special Window shall mean those projects where the value of receivables plus the value of unsold inventory is greater that the completion cost and outstanding liabilities at the project-level.

What portion of the stalled real estate housing projects fall under the affordable and mid-income segment?

As per industry estimates, 90 per cent of the stalled projects are under the affordable and mid-income segment.

How many projects are expected to be benefited under the scheme?

As per industry estimates, in the stalled category, there are about 1509 housing projects comprising of nearly 4.58 lakh housing units.

Projects meeting the investment eligibility criteria will be financed. The maximum finance for any single project will be Rs 400 crore.

There will be caps put in place for a single developer and for any single city as well as part of the final detailed scheme.

What is the expected timeline for execution of projects once funding is received?

The objective of the Special Window is to complete the construction of the stalled projects at the earliest. Accordingly, funding would be structured to meet the construction and sales schedule of the relevant projects.

Who will construct the project if the developer is incapable?

As part of the investment review, the Investment Manager will take a call if there is any need to change the developer for the project.

Will there be any specific guidance issued for the homebuyers?

Homebuyers are advised to reach out to their respective lending institutions to seek necessary guidance for additional borrowing or revival of their existing home loans within the existing legal and regulatory framework and standard board approved policies of the lending institutions.