The recent update on the Special Window for Affordable and Mid-Income Housing (SWAMIH) Investment Fund reports that it has successfully completed 20,557 homes since its establishment in 2019. The fund, considered as India’s largest social impact fund, was specifically formed to complete stalled and stressed residential projects.
Understanding the SWAMIH Investment Fund
The SWAMIH Investment Fund is an Alternate Investment Fund (AIF) falling under Category-II debt fund and is registered with the Securities and Exchange Board of India (SEBI). Launched by the Ministry of Finance in 2019, the fund’s management rests with SBICAP Ventures Ltd., a company belonging to the State Bank Group.
Eligibility Criteria for Funding
To be eligible for SWAMIH funding, real estate projects must be registered under the Real Estate (Regulation and Development) Act (RERA). These projects should be nearing completion but are stalled due to insufficient funds. Furthermore, these residential projects must fit under the ‘Affordable and Middle-Income Project’ category, indicating that the housing units do not exceed 200 square meters. Net-worth positive projects, those with receivables and unsold inventory values higher than completion costs and outstanding liabilities, are also eligible.
Fund Objectives
SWAMIH aims to provide financial assistance to ensure the completion of stalled housing projects and deliver apartments to homeowners. In turn, this will boost core industries like cement and steel by unlocking liquidity in the real estate sector.
Performance and Impact of the Fund
With sanctions worth over Rs 12,000 crore, the fund has provided final approval to approximately 130 projects. It has completed 20,557 homes with plans to finish over 81,000 homes in the next three years across 30 tier 1 and 2 cities. It has successfully completed construction in 26 projects, generating returns for investors, and played a significant role in the growth of many ancillary industries in the real estate and infrastructure sector. The fund has unlocked liquidity of more than Rs. 35,000 crore.
Decoding Alternative Investment Funds (AIFs)
An AIF is a collective investment vehicle that invites money from various investors to invest in non-traditional assets like private equity, hedge funds, real estate, commodities, etc., beyond the usual stocks, bonds, and cash. Aimed primarily at high-net-worth individuals and institutional investors, these funds require a high level of knowledge and resources to invest in complex and less liquid assets. In India, the definition of AIFs is laid down under Regulation 2(1)(b) of SEBI Regulations (AIFs), 2012, excluding funds covered under specific regulations of SEBI to regulate fund management activities.