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Journalism of Courage
Finance Minister Nirmala Sitharaman on Wednesday announced the creation of a special window to provide last mile funding for housing projects that are stressed. While the total commitment of funds to be infused by the government in the affordable and middle-income group housing sector through the special window was set at Rs 10,000 crore, the fund would seek matching contributions from banks, LIC, and others to generate a total corpus of around Rs 25,000 crore.
Funding will be provided only to those projects that are net worth positive. Stuck projects classified as Non-Performing Assets (NPAs) and those undergoing resolution under the National Company Law Tribunal will also be eligible for funding — a change from an earlier proposal that barred such projects from support.
How will the fund help projects like Jaypee?
Since the criteria of net worth positive is being assessed at project level and not at company level, many of the Jaypee projects can potentially get funding from the special window.
The government clarified that net-worth positive projects stand for projects where value of receivables plus the value of unsold inventory is greater that the completion cost and outstanding liabilities at the project-level.
Real estate sector analysts note that many projects of Jaypee and other builders around Delhi NCR will get relief from the fund.
And what will not be covered?
Projects that have been languishing for years, and those in which the builder has sold most of the inventory, are unlikely to get funding since such projects will not have any net receivable value left for the fund to recover its money.
Real estate companies that are staring at liquidation during proceedings in National Company Law Tribunal will also not be covered by the fund.
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