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Government's move to announce realty AIF is a significant one, says HDFC's Keki Mistry

real estate | Nov 6, 2019 9:50 PM IST

Government's move to announce realty AIF is a significant one, says HDFC's Keki Mistry

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The long-awaited relief to homebuyers and the real estate sector is here. Government has cleared an alternate investment fund worth Rs 25,000 crore to breathe life into middle and low income housing projects that are currently stuck. In September, the finance minister had said that a fund to revive real estate is in the making and today, the cabinet has given its blessings. In this fund, government will invest Rs 10,000 crore. LIC and SBI will invest the remaining amount and the fund will be managed by SBI-CAPS. So who will benefit? Housing projects in metros that are less than Rs 2 crore per unit and in non-metros its houses that cost less than Rs 1 crore that will benefit. The government has dropped a condition that it had earlier set allowing projects that have been declared as NPA to avail the benefits. Samir Jasuja of PropEquity, Satish Magar, President, CREDAI and Keki Mistry, Vice Chairman and CEO of HDFC shared their views and outlook.

The long-awaited relief to homebuyers and the real estate sector is here. The government has cleared an alternate investment fund worth Rs 25,000 crore to breathe life into middle and low-income housing projects that are currently stuck. In September, the finance minister had said that a fund to revive real estate is in the making and on Wednesday, the cabinet gave its blessings. In this fund, the government will invest Rs 10,000 crore. LIC and SBI will invest the remaining amount and the fund will be managed by SBI-CAPS.

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So who will benefit? Housing projects in metros that are less than Rs 2 crore per unit and in non-metros its houses that cost less than Rs 1 crore that will benefit. The government has dropped a condition that it had earlier set allowing projects that have been declared as NPA to avail the benefits. Samir Jasuja of PropEquity, Satish Magar, President, CREDAI and Keki Mistry, Vice Chairman and CEO of HDFC shared their views and outlook.
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“It is a very significant move. In September when the finance minister (FM) had announced this fund, at that time also I had mentioned that one of the most important things, which needs to be done is that the money from the fund should be made available to projects, which are non-performing loans (NPLs). What we have to understand is that if a project is stuck because of lack of funds then in all probabilities the loan, which is given for that project will be an NPL in someone’s book or the other. So to deny these projects the money from this fund will mean that a large part of their project, which is stuck will not be able to come out of the issue. Therefore, it is important that the money from the fund is made available to these National Company Law Tribunal (NCLT) and non-performing assets (NPAs) accounts,” Keki Mistry said.
“The biggest change that has been made is that the projects that are NPAs and NCLT have been included, which means that almost 80 percent of the projects that have been stuck out of the 1,600 will see funding being opened up to them and most of them have been coming from the National Capital Region (NCR) and the Mumbai region,” added Jasuja.
“This was the demand which we were making because these NPAs or NCLT projects which are not going to the resolution needed to boost the most. With these two conditions being modified, a lot of good is going to happen because these projects are stuck because of a lack of liquidity, because of the non-banking financial companies (NBFC) crisis or another crisis. If they are cash flows more projects will see light of the day and the homebuyers are going to be happy, the banks are going to be happy because the money is going to come out and the overall development will be completed so this is an extremely good initiative with the finance minister has taken at this point of time,” Magar further mentioned.
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