Context
Recently, the SWAMIH (Special Window for Affordable & Mid-Income Housing) fund has made its first complete exit from an investment made for the completion of a residential project in Mumbai.
About
- Special Window for Affordable & Mid-Income Housing fund is a government-backed fund that was set up as a Category-II AIF (Alternate Investment Fund) debt fund registered with SEBI (Securities and Exchange Board of India), which was launched in 2019.
- The liquidity squeeze and the cash trap situation the real estate sector faced in 2019 made things even more difficult, prompting the government to introduce the program.
- Liquidity squeeze or cash trap is a situation in which interest rates are lower for investors to prefer savings rather than investing.
- The Investment Manager of the fund is SBI (State Bank of India) CAP Ventures, a wholly-owned subsidiary of SBI Capital Markets, which in turn is a wholly-owned subsidiary of SBI.
- The Sponsor of the fund is the Secretary, Department of Economic Affairs, Ministry of Finance, on behalf of the Government of India.
- Aim: To provide financing to enable completion of stalled housing projects and ensure delivery of apartments to homebuyers.
Eligibility criteria
- The real estate projects seeking last-mile funding from SWAMIH must be the Real Estate (Regulation and Development) Act (RERA)-registered which has been stalled due to a lack of adequate funds.
- Each of these projects must be very close to completion.
- They must also fall under the category ‘Affordable and Middle Income Project’ (any housing projects where houses do not exceed 200 sq.m.).
- Net-worth positive projects are also eligible for SWWAMIH funding.
- Net-worth positive projects are those projects for which the amount of their receivables (debts owed to them by buyers), plus the value of their non-selling assets is greater than their completion costs and outstanding liabilities.
Significance of Fund
- It helps to unlock liquidity in the real estate sector and provides a boost to core industries such as cement and steel.
RERA
- Inception: The Regulation and Development Act (RERA) is a law passed by Parliament in 2016 with full effect from 1 May 2017.
- The Act establishes a Real Estate Regulatory Authority (RERA) in each state to regulate the housing and real estate sector and also acts as a dispute resolution tribunal.
- Aim: It aims to protect real estate buyers and help increase investment in the real estate sector by bringing efficiency and transparency to real estate.
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