FM Sitharaman: Govt's SWAMIH Fund to invest Rs 650 crore in six stuck Amrapali projects, complete 7,000 homes

SBI Cap is funding Rs 650 crore for six projects to bridge the temporary liquidity gap.

The projects receiving the funds include Silicon City-1, Silicon City-2, Crystal Homes, Centurian Park- Low Rise, O2 Valley and Tropical Garden where 6,947 units are stalled of which 6,132 units are sold but homebuyers are awaiting delivery.

These projects were launched almost about 10 years ago between 2011 and 2013 and have been delayed for more than 4-5 years from their promised delivery timeline. The execution works on the said projects were hampered due to the slow inflow of funds and disruptions caused by the COVID-19 pandemic.

However, funding from SBICAP Ventures Ltd., NBCC shall expedite the progress of the works and will aim to complete the projects within the scheduled time, NBCC had said in a statement.

The Court receiver will be assisted by NBCC, which took the construction contracts for these projects after a Supreme Court order and is involved in the completion of about 22 Amrapali housing projects, which were stalled amid a fund crunch due to financial mismanagement at the erstwhile real estate firm.

“The SWAMIH Fund team has again demonstrated an agile, flexible and responsive effort at creating solutions to such vastly complex transactions. They have been relentless in ensuring that such stressed projects get construction funding to honour their mandate of delivering homes to anxious home buyers. This funding will not only complete the 7,000 stuck homes but will also generate a considerable amount of ancillary employment opportunities and unlock capital invested at various levels,” said Suresh Kozhikote, MD & CEO, SBICAP Ventures, in a statement.

Irfan A Kazi, Chief Investment Officer of the SWAMIH Investment Fund said: “We would like to encourage more developers, whose projects are stressed for want of capital, to reach out to SBICaps Ventures team, so that those projects could be evaluated and capital be provided to rescue the troubled home buyers.”

R. Venkataramani, Senior Advocate and Court-appointed Receiver of the Amrapali stressed projects said, “We are grateful to the Hon’ble Supreme Court for handholding and helping us secure funding from the SWAMIH Fund. Both the teams have spent hours clearing roadblocks and negotiating to ensure that this funding becomes solution towards delivering the stalled homes to anxious home buyers. Homebuyers in these projects can expect to see fast paces construction and should plan to pay their outstanding dues as directed by the Hon’ble Court.”

The Supreme Court on August 2 had asked banks to relax the funding criteria for stalled Amrapali projects that include submission of collateral security and corporate guarantees, saying that lending to the projects be treated as a special case since it was being monitored under the supervision of the apex court.

The two-member bench comprising Justices U U Lalit and Ajay Rastogi had asked banks to hold a joint meeting with the court receiver by August 8 to arrive at a consensus on funding.

Earlier, the Supreme Court-appointed court receiver R Venkataramani, tasked with monitoring the construction of Amrapali projects, had said in a note submitted before the apex court that banks and prospective lenders had raised an issue with regard to ASPIRE (Amrapali Stalled Projects Investments Reconstruction Establishment) that was registered but does not have a credit rating as a company or past history of performance.

NBCC had also apprised the court receiver of the constraints faced by it for raising funds towards completion of stalled projects of the embattled firm. These included issues such as ASPIRE SPV not having any past history and credit rating as it is a newly formed entity.

It had also told the court receiver during a meeting held on July 29 that majority of banks had raised the issue of non-availability of collateral security in the form of mortgage of other assets/ sovereign and corporate guarantee or a letter of comfort.

Banks have been asking NBCC for a letter of comfort for financing the project.

The court had in 2019 asked the government’s construction arm to finish and deliver 38,159 flats by 2023 after several homebuyers sought its intervention, complaining about years of delay in handing over their homes.

The total cost of completing all stuck projects by Amrapali Group is approximately Rs 8,500 crore. NBCC is executing these projects as PMC and would get 8 percent as fees. It is not using its funds, which are being facilitated by a receiver appointed by the Supreme Court.

On July 23, 2019, the top court cancelled the registration of the Amrapali Group under the Real Estate (Regulation and Development) Act, 2016, and ousted it from its prime properties in NCR by nixing land leases for breaching buyers’ trust.