SWAMIH Investment Fund | Special Window for Completion of Affordable & Mid-Income Housing

SWAMIH investment fund, a ‘Special Window for Completion of Affordable and Mid-Income Housing’  has been created by the Government of India in order to give relief to homebuyers of stalled projects.

SWAMIH Fund Latest News

• The government, in March 2023, declared that it would increase its total investment in the fund by Rs 50 billion, bringing it close to Rs 155.3 billion. The extra commitment will allow the fund to keep reviewing agreements through December 2024.
• The Rs 15,530-crore fund supported by the finance ministry has so far awarded final permission to 130 projects with sanctions of Rs 125 billion. 
• For the next three years, it plans to finish approximately 81,000 homes in 130 projects spanning 30 tier 1 and 2 cities, with 20,557 homes already completed.
• A steady revival in construction, sales cycle and liquidity has helped many banks and financial institutions get debt repayments. A multiplier effect of 2.5 to 3 times at play across all ancillary industries. 

The Government of India’s SWAMIH investment fund has worked its way through the difficult period of the COVID-19 pandemic and completed its first residential project. 

• The Rivali Park residential project, located in suburban Mumbai, was the first housing project in India to have received funding under the SWAMIH Fund and is also the first stalled housing project to have been completed, delivering homes to 640 people that will benefit 1.16 Lakhs Indian families. 

SWAMIH fund is a relevant topic for aspirants of the IAS exam as well as other competitive exams.

This article will provide each and every detail about the SWAMIH Investment Fund so that candidates can prepare for the upcoming UPSC Prelims exam comprehensively.

SWAMIH Fund

• Due to the Funds crunch, many real estate projects across the country were stalled. The Government of India to help complete over 1,500 stalled housing projects comprising 4.58 lakh housing units, announced a Rs 25,000 crore SWAMIH fund, in November 2019.
• SWAMIH Investment Fund is a government-backed fund that was set up as a Category-II AIF (Alternate Investment Fund) debt fund registered with the Securities And Exchange Board of India – SEBI.
• SWAMIH fund was formed to complete the construction of stalled, RERA-registered affordable and mid-income category housing projects which are stuck due to paucity of funds. Read in detail about the Real Estate Act 2016 on the given link. 
• The Sponsor of the Fund is the Secretary, Department of Economic Affairs, Ministry of Finance, on behalf of the Government of India.
• The Investment Manager of the Fund is SBICAP Ventures, a wholly-owned subsidiary of SBI Capital Markets, which in turn is a wholly-owned subsidiary of the State Bank of India.
• As many as 72 projects with 44,115 dwelling units have got funding of Rs 6,995 crore under SWAMIH Fund I and 132 preliminary approvals have been given for 132 projects with 72,457 units with an investment of Rs 11,581 crore. The total cost of these stalled projects stands at Rs 54,520 crore.

Aim of SWAMIH Funds

1. The aim of SWAMIH Funds is to provide funding to stalled projects that are net-worth positive, including those projects that have been declared as Non-Performing Assets (NPAs) or are pending proceedings before the National Company Law Tribunal – NCLT under the Insolvency and Bankruptcy Code – IBC. 
2. SWAMIH investment fund will provide last mile funding to the stressed affordable and middle-income housing projects in the country.

Also read in detail about the Insolvency and Bankruptcy Code – IBC on the linked page. 

SWAMIH Investment Fund – Associated Benefits

1. A large amount of capital locked up in these projects will be released once these homes are constructed and completed.
2. It will provide employment to construction workers and will provide impetus to the allied industries such as steel and cement.
3. It will significantly improve the economic sentiment in the nation and will also improve portfolios of Banks and NBFCs.

Candidates can get in-depth information on Types of Non-Banking Financial Companies  NBFCs on the linked page. 

Who will be the investor of the SWAMIH Investment Fund?

Alternate Investment Funds created/funded under the Special Window would solicit investment from 14 investors –

1. With the government holding 50% of the fund,
2. Life Insurance Corp. and State Bank of India each having 10%, 
3. The rest with public and private-sector players which will include cash-rich financial institutions, public and private banks, sovereign wealth funds, domestic pension and provident funds, global pension funds and other institutional investors.

Aspirants can check the related links to prepare comprehensively for the upcoming exams – 

Real Estate Sector in India

Real estate sector plays an important role in the country’s economy. The industry is the second-largest employment generation sector in India, providing jobs to 5 crore people.

1. In 2019-2020, the sector’s contribution to the economy was close to USD 200 billion and it is expected that the sector’s contribution to the economy would be around USD 1 trillion by 2030.

In the last couple of years, the Ministry of Housing and Urban Affairs, has taken several steps so that the real estate sector not only survives the cycles but thrives. Some of these measures are highlighted below.

Steps Taken by Government to Boost Real Estate Sector

In order to boost real estate sector, the Government has taken various initiatives such as- 

1. Reduction in Goods and Services Tax (GST) on under-construction Affordable Housing projects from existing 8% to 1% without Input Tax Credit (ITC) and in case of other housing projects from 12% to 5% without ITC.
2. Increase in Priority Sector Lending for Affordable Housing Project from Rs. 28 lakh to Rs. 35 lakh in metros and from Rs. 20 lakh to Rs. 25 lakh in non-metros. Read in detail about Housing for ALL Scheme on the given link. 
3. Setting up of Affordable Housing Fund in National Housing Bank
4. Additional Deduction of Rs. 1.5 lakh on account of Home Loan Interest in addition to the deduction of Rs. 2 lakh for affordable housing
5. Extension of 100% deduction on profits for construction of affordable housing projects under section 80-IBA of the Income Tax Act till 31.03.2021 and widening the scope of section 80-IBA from 30 to 60 square meters in metros regions and 60 to 90 square meters in non-metros cities.

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