SWAMIH Investment fund

What’s in today’s article?

• Why in news?
• What is the SWAMIH investment fund?
• What is significance of SWAMIH investment fund?
• How many projects so far have been financed by the Fund?

 

Why in News?

• The Special Window for Affordable and Mid-Income Housing (SWAMIH) Investment Fund I has raised Rs 15,530 crore since its inception in 2019.
• This amount has been raised with an aim to provide priority debt financing for the completion of stressed, brownfield and Real Estate Regulatory Authority (RERA) registered residential projects that fall in the affordable, mid-income housing category.

 

What is the SWAMIH investment fund?

• About
  • In November, 2019, the central government launched the ‘Special Window for Funding Stalled Affordable and Middle-Income Housing Projects’ or ‘SWAMIH’ Scheme.
  • It is a social impact fund specifically formed for completing stressed and stalled residential projects.
  • The objective of the scheme is to provide priority debt financing for the completion of stalled housing projects falling under the affordable and middle-income housing categories.
• Sponsored by
  • The Fund is sponsored by the Ministry of Finance, Government of India.
• Managed by
  • This fund is managed by SBICAP Ventures Ltd., a State Bank Group company.
• Eligibility criteria for funding under SWAMIH
  • Real estate project must be registered under the Real Estate (Regulation and Development) Act (RERA) 2016.
  • Project must be classified as a non-performing asset (NPA) or be under insolvency proceedings.
  • The project should have been declared as a "stalled" or "delayed" project by a competent authority.
  • The fund is available only for projects that fall under the affordable and mid-income housing categories.
  • Net-worth positive projects are also eligible for SWAMIH funding.
    • A project is considered net-worth positive if the value of sold receivables plus unsold inventory is greater than cost to complete construction and to service the investment by the Fund.

 

What is significance of SWAMIH investment fund?

• Lender of last resort for distressed projects
  • The Fund considers: 
    • first-time developers, 
    • established developers with troubled projects, 
    • developers with a poor track record of stalled projects, 
    • customer complaints and NPA accounts, and 
    • even projects where there are litigation issues.
  • Hence, it is considered as the lender of last resort for distressed projects. 
• Catalyst for better collections & sales
  • The Fund’s presence in a project often acts as a catalyst for better collections and sales primarily in projects that were delayed for years.
• Timely delivery of homes and growth of real - estate
  • This Fund has one of the largest domestic real estate private equity teams focused only on funding and monitoring the completion of stressed housing projects.
  • This will ensure the timely delivery of homes to the home-buyers. This, in turn, will aid the growth of the real estate sector in India.

 

How many projects so far have been financed by the Fund?

• Since its inception in 2019, SWAMIH has
  • Provided final approval to about 130 projects with sanctions worth over Rs 12,000 crore; 
  • Completed 20,557 homes and aims to complete over 81,000 homes in the next three years across 30 tier 1 and 2 cities.
• The Fund has been able to complete construction in 26 projects and generate returns for its investors.
• It has also played a critical role in the growth of many ancillary industries in real estate and infrastructure sector having successfully unlocked liquidity of more than Rs. 35,000 crore.

 

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Q1) How are Affordable or Mid-income Housing projects defined under SWAMIH?

The Investment Manager, under SWAMIH, has defined Affordable or Mid-income Housing units as any housing units that do not exceed 200sqm RERA carpet area and are priced as following (as applicable):

• Less than INR 2cr in Mumbai Metropolitan Region;
• Less than INR 1.5cr in National Capital Region, Chennai, Kolkata, Pune, Hyderabad, Bangalore and Ahmedabad;
• Less than INR 1cr in the rest of India;

 

Q2) What is RERA?

RERA stands for the Real Estate (Regulation and Development) Act, which was passed by the Indian Parliament in 2016 to regulate the real estate sector in India. The Act aims to bring transparency, accountability, and efficiency in the real estate sector and protect the interests of home buyers.

 

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Source: What is the SWAMIH investment fund and its affordable housing push | PIB | SBICAP Ventures