The government is considering a Rs 10,000 crore fund for stressed housing projects and housing secretary has told CNBC-TV18 the fund will be for projects which are 90 percent completed and need last mile funding. Keki Mistry, chief executive of Housing Development Finance Corp Ltd said a fund of Rs 4000-5000 crore in partnership with the private sector—if that comes through, it will give homebuyers a hope of resolution.
To discuss about how such a fund would achieve project completion and does not become mere optics like the entire NBCC saga, CNBC-TV18's Manisha Natarajan spoke with a panel of experts: MS Mani, partner at Deloitte India; Pankaj Bajaj, MD of Eldeco; Gulam Zia from Knight Frank India; and Sunil Tyagi, co-founder and senior partner at Zeus Law.
Sunil Tyagi, co-founder and senior partner, Zeus Law
A fund for projects which are already 90 percent complete could require some legislative backing, he said. It is also important to see who will set up the fund, who will fund it, objects of the fund and who will manage it and whether it will again involve NBCC or ask developers to complete the project or buyers association, added Tyagi. "However, the commitment to set up this fund is the key and once it is set up the other things could be taken care of."
MS Mani, partner, Deloitte India
"There are different ways of doing this: One, is we already have a definition of 90 percent completion. In addition, in GST we also have this concept of an occupation certificate (OC) having been granted. However, there are some projects where OC is granted but they are not completed."
"At a broad level, my take would be that most of the tax impediments which were there with respect to these projects have been taken away. So, now it’s more an issue of how to arrange the remaining working capital so that we go ahead and start working on these projects all over again," he added.
Pankaj Bajaj, MD of Eldeco
A Rs 2000 crore or Rs 10,000 crore stressed fund is not an answer to the woes of the sector, said Bajaj. “We don’t need a stress fund but a mechanism to ensure that funding, which comes in at this time is superior to any other funding, and therein lies the legislative catch."
"Even today there are enough funds floating around but what they don’t want to get stuck in is the fog mire of multiple claimants and would like to be superior to everybody else,” he said, adding that it should ‘last in first out’ kind of funding and this kind of mechanism is not there in RERA or IBC. It will require multiple interventions at the legislative level, he added.
Gulam Zia, Knight Frank India
Agreeing with most of the above experts, Zia said the government has to find some different way of addressing this problem. The key here is execution and completion of the projects for which we need something else like an EPC model and bring in proper programme managers to ensure the project is completed on time, said Zia.