Home Construction Industry Voice on fund for stalled projects, now includes NPA/ NCLT projects – a much-needed booster.
Industry Voice on fund for stalled projects, now includes NPA/ NCLT projects – a much-needed booster.

Industry Voice on fund for stalled projects, now includes NPA/ NCLT projects – a much-needed booster.

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Dr Niranjan Hirnandani,
MD- Hiranandani Group,
National President -NAREDCO.

The vexed problem of delayed and stalled real estate projects appears to have found a solution, with the Hon’ble Finance Minister announcing Cabinet Approval of the scheme to provide ‘last mile funding’ for such projects, which she had proposed earlier.

The funds will be used to provide priority debt financing for the completion of stalled housing projects in the Affordable and Middle-Income Housing sector, providing relief to developers with unfinished projects as also ensuring delivery of homes to buyers, said Dr. Niranjan Hiranandani, MD, Hiranandani Group and National President – NAREDCO.

If the developer has not declared liquidation, they can avail the cover, the Hon’ble Finance Minister said. “This will be a win-win for home buyers and real estate developers, as it will help alleviate financial stress faced by homebuyers who have invested their hard-earned money, while also releasing funds stuck in such delayed/ stalled projects for productive purposes,” he added

“The fund will help nearly 1,600 stalled housing projects in the country, and it is positive that the aspect of NCLT/ NPA will not be a stumbling block to prevent stalled and delayed projects from approaching the fund,” he added.

Positive impact of the move include generation of employment, revival of demand for cement, iron and steel industries and relieve stress in other major sectors of the economy, he added.

The announcement that State Bank of India (SBI) and Life Insurance Corporation of India, sovereign and pension funds would also contribute to the fund, is welcome, he said, adding that the announcement will prove to be a win-win for both, home buyers as also real estate developers – “but the devil in the detail in this case will be quick implementation,” he concluded.

Ramesh Nair,
CEO & Country Head,
JLL India.

The Cabinet’s approval of a special window for funding of stalled affordable and middle-income housing projects to enable homebuyers to get delivery of homes locked in stalled housing projects is an extremely positive move.  This move by the honourable FM is likely to become a game changer as it now includes projects, which are NPA or are under NCLT, a major pain point that was left unaddressed in the last announcement. This will be a respite to homebuyers, whose dream of owning their own house have been long shattered owing to uncertainties in project deliveries. At the same time, it protects the interests of the private investors who are expected to contribute nearly 60% to this proposed fund. Stringent criteria with respect to projects being net worth positive, registration with RERA, appraisal by investment committee will ensure safety and protection of commercial returns for the investors. The registration of projects with RERA being one of the necessary conditions, this measure will have a far reaching impact on states which are lagging behind in the implementation of the reform. At the same time, states which have not implemented RERA may not benefit from this liquidity shot. JLL’s recent study showed that Delhi NCR contributed to more than 60% of delayed residential units followed by Mumbai, constituting nearly one-fifth of the overall delayed units across the top seven cities in India. It has come at an opportune moment when the residential market is tackling the headwinds from the trickle down impact of the series of reforms and economic slowdown. While it will boost consumer sentiment and enhance confidence, it will act as a strong catalyst in pushing the sales velocity.

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