Tasked with funding stuck projects across the country, SBICAP Ventures, the manager for the government's Rs 25,000-crore stressed-asset fund, will be delivering about 26 housing projects consisting of more than 12,600 homes within the next one year, said Dinesh Kumar Khara, chairman of State Bank of India.
As of now it has given preliminary approvals to 132 projects which would take care of 72,500 homes. Subsequent to all diligences, it has also given approval to 72 projects which will benefit 44,000 homes, he said.
“There are as many as 1.16 lakh homes in the pipeline spread across 100 projects which are being scrutinized at various levels,” he said at the ceremony to mark the handing over of 640 homes to homebuyers of Mumbai-based CCI Projects Pvt Ltd's maiden residential project Rivali Park which is among the first projects in the country to have received funding for stuck projects under the SWAMIH Fund.
Union Minister for Finance and Corporate Affairs Nirmala Sitharaman on May 13 handed over possession to 640 homebuyers virtually.
Khara also said SWAMIH Fund is being managed tirelessly to meet the huge expectations that have been laid out before the bank and partners. The Union government committed Rs 10,000 crore into this stress fund while the remaining would come from institutional investors like state insurer LIC, the country's largest lender SBI and private investors.
The fund achieved its first closing with 14 investors and a capital commitment of Rs 10,037 crore on December 6, 2019.
Most of the stuck projects are spread across a mix of markets. These include large cities such as NCR, MMR, Bengaluru, Chennai, Pune and also Tier 2 locations including Karnal, Panipat, Lucknow, Surat, Dehradun, Kota, Nagpur, Jaipur, Nashik, Vizag, Chandigarh.
“Over and above the five centres, we have projects spread from Ranchi to Amritsar to Trivandrum covering almost 41 cities across the country. We would like to see as many homebuyers as possible occupying their homes,” Khara said.
Also, of the 26 housing projects, nine are located in Mumbai, seven in Delhi-NCR and the rest are spread across other Tier 1 and Tier 2 cities, Irfan A. Kazi, Chief Investment Officer at SBICAP Ventures Ltd told Moneycontrol.
SWAMIH Fund has taken a departure from the past mode of financing where financing provided by the agency or by the financial institutions was just one component of the total finance. It was dependent on the sales and the collections. “We are different because we are not dependent on sales, collections, or what happens as a result of COVID-19 in the years ahead,” Kazi said.
“We consider the project’s cashflow positivity regardless of the difficulties it has experienced in the past before providing financial support to a project. The entire amount is only to be utilized for construction and no repayment is asked for until the project is fully completed. There is little or no possibility of it being diverted. We act as a pseudo financial controllers for the project and ensure that the project is completed within the budget sanctioned for the project,” he explained.
The fund was set up under the Special Window for Affordable and Mid Income Housing (SWAMIH) by the government in 2019. In November 2019, the central government announced a Rs 25,000-crore SWAMIH Investment Fund to help complete over 1,500 stalled housing projects, including those that have been declared non-performing assets (NPAs) or had been admitted for insolvency proceedings.
The move was aimed at helping 4.58 lakh housing units across the country. Only RERA-registered projects with a positive net worth will be provided funds.
There are a total of 5.02 lakh units that are presently stuck or delayed, as of the end of 2020, across the top seven cities. Their total value is estimated at over Rs 4.07 lakh crore, an analysis by Anarock has said, adding that National Capital Region (NCR) and the Mumbai Metropolitan Region (MMR) together account for a 74 percent 'majority share' of currently stuck/delayed units, while the southern metros of Bengaluru, Chennai and Hyderabad add up to a small 8 percent.