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Nirmala Sitharaman's housing booster: Rs 20,000 crore stress fund to complete held-up flats – Times of India, The Times of India

Nirmala Sitharaman's housing booster: Rs 20,000 crore stress fund to complete held-up flats – Times of India, The Times of India


NEW DELHI: The government on Saturday announced the setting up of a nearly  RS 20, 000 – crore stress fund  for completion of stalled affordable and middle-income housing projects that have not been classified asnon-performing assets(NPAs) and are not facing insolvency action.

The much-awaited move is expected to potentially benefit 3.5 lakh dwelling units across the country but offers little comfort to lakhs of home-buyers in nearly 400 projects held up inNational Company Law Tribunal, dealing with insolvency cases. There are also a few thousand developers whose fund flow is choked as banks have classified them as NPAs for failure to repay loans. The government said their resolution will have to be through IBC and NCLT processes.

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“This window will help in completion of affordable and middle income housing projects. The fund will be managed by professionals, ”finance ministerNirmala Sitharamantold a news conference. She, however, said the coverage was not extended to NCLT orNPA-hit casesas the government did not want to interfere with their outcome.

With new buyers for insolvency-hit real estate projects being tough to find, home-buyers were banking on the stress fund to help complete their projects, some of which were launched over a decade ago.

Over the coming weeks, the government will release details, including a definition of middle-income dwelling units, which is currently missing. Sitharaman said projects which are 60% complete will be eligible to tap money from the stress fund and suggested home-buyers of held-up projects could approach developers to prod them into availing of the facility.

While the government will contribute Rs 10, 000 crore for the special window, a matching amount will come from outside investors . Like the National Infrastructure Investment Funds, the Center can contribute to the stress fund, LIC, private sector lenders and other financial institutions can also help build the corpus.

Announcing the measures to boost the housing sector, Sitharaman also said the interest rates on ‘House Building Advance’ for government employees will be lowered and linked with 10 – year government security yields to encourage them to buy new houses. “Government employees contribute a major component of demand for housing and it will encourage more government employees to buy new houses,” Sitharaman said.

The house building assistance is available to central and state government employees for constructing a new house on a plot owned by the employee or jointly with the spouse and also for buying a new house or flat. An employee can avail such an advance only once during his / her entire service.

The government also announced that the External Commercial Borrowing (ECB) guidelines will be relaxed to facilitate financing of home buyers who are eligible under the PM Awas Yojna. Sitharaman said this will be done in consultation with RBI.

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