Cabinet has approved AIF Fund that will act as Special Window to affordable and low income housing projects completion it is inline with the set of reforms announced earlier.
As per the details 1600 projects consisting of 4.58 lakh housing units are incomplete as on date. To complete such project this AIF fund provide the amount in an escrow account that will be used by the developer to complete the project . The main condition to get the fund is that the project net worth needs to be positive even if the company is declared as NPA or under NCLT but not going for liquidation.
The housing unit value of the projects to which such funding can be provided is limited Rs. 2cr for Mumbai Region , Rs. 1.5 Cr for Delhi NCR , Bangalore , Kolkata , Chennai & Rs.1 cr or below in other cities.
AIF Fund will have total asset size of Rs. 25,000 cr initially that will have Rs.10,000cr from Government & Rs.15,000cr from LIC & SBI. This will increase as Sovereign Funds & Pensions Funds have also shown interest. The Fund will be initially managed by SBI Caps.
Our View :
This is positive to improve sentiment among the real estate buyers and developers. It will also provide a relief to the developer financiers as the project completion gets done the repayment of the dues against the project can be made. And would reduce inventory that has been adding on and has put pressure on price of the units along with denting the cashflow of the developer.
Positive : Cement , HFCs & Paint Sectors