In yet another slew of announcements to boost the economy, Finance Minister Nirmala Sitharaman announced several measures for the housing and export sectors. The FM announced that a special window will be set up by the government to provide last mile funding for incomplete housing projects in the affordable and middle-income category. The fund size will be Rs 10,000 crore.
This special window will aid the completion of projects in these categories that are non-NPA and non-NCLT projects and are net worth positive. What this means is that projects that are under dispute by the NCLT for lack of funds and those categorised by banks as non-performing assets will not qualify.
The government will bring in experts from housing and banking sectors to run this fund. The FM said that these professionals will identify eligible projects across the country where nearly 60% complete but are short of cash flow to complete remaining.
“As a result, middle income groups and affordable housing buying groups and those who have invested in their houses and are waiting for it to be given to them can find relief,” Nirmala Sitharaman said.
While the government will contribute Rs 10,000 crore for this fund, roughly the same amount will be brought in from outside investors. These investors could be LIC and private capital from banks/sovereign funds/DFIs, etc.
The government also announced that External commercial borrowing (ECB) guidelines will be relaxed to help housing developers raise overseas funds.
ECB guidelines will also be relaxed to facilitate financing of homebuyers who are eligible under Pradhan Mantri Awas Yojna, in consultation with the RBI.
The FM also announced that the interest rate on housing building advance will be lowered.
"Government servants contribute to a major component of demand for houses. This will encourage more government servants to buy new houses," she added.