The real estate sector in India has witnessed significant growth over the years. However, it has also been affected by several challenges such as stalled and incomplete projects, litigation issues, and lack of liquidity. This has led to a pile-up of inventory and financial stress for developers, which ultimately results in delayed delivery of homes to buyers. The situation has only worsened due to the COVID-19 pandemic, which has affected the industry’s growth and recovery.
In response to this, the Government of India launched the SWAMIH (Special Window for Completion of Construction of Affordable and Mid-Income Housing Projects) Fund in 2019. The Fund was established as a social impact fund, aimed at providing debt financing for completing stalled and RERA-registered residential projects. The Fund’s primary objective is to revive distressed projects and promote affordable housing, which is a crucial aspect of the government’s ‘Housing for All’ mission.
By SBICAP Ventures Ltd
Managed by SBICAP Ventures Ltd., a State Bank Group company, the Fund is sponsored by the Union Ministry of Finance. SWAMIH is regarded as the lender of last resort for distressed projects, including those with litigation issues or troubled histories. The Fund has provided final approval to nearly 130 projects worth around Rs 12,000 crore, and has raised Rs 15,530 crore to date. It has completed 20,557 homes and aims to complete over 81,000 homes in the next three years across 30 tier 1 and 2 cities.
Reviving Distressed Projects SWAMIH aims to provide a platform for developers to complete their stalled projects and provide relief to the buyers who have invested their hard-earned money in these projects. The Fund provides debt financing to these developers at competitive interest rates, enabling them to complete their projects and deliver homes to buyers. The projects are selected based on a rigorous due diligence process and must be RERA-registered.
Impact on Affordable Housing
SWAMIH’s primary focus is on promoting affordable housing, which is a crucial aspect of the government’s ‘Housing for All’ mission. The Fund has made significant contributions towards this objective by financing projects that cater to the affordable and mid-income housing segments. The Fund’s investments have helped to reduce the backlog of affordable homes and enabled buyers to own homes at affordable prices.
SWAMIH’s investments in affordable housing projects have also created a positive impact on the country’s overall housing sector. It has encouraged developers to focus on affordable and mid-income housing, which is essential for promoting inclusive growth and reducing income inequality.
Challenges and the Way Forward
While the SWAMIH Fund has made significant progress in reviving distressed projects and promoting affordable housing, it also faces several challenges. One of the significant challenges is the lack of transparency in the real estate sector, which makes it difficult to identify viable projects. The Fund must ensure that the projects it invests in are transparent and have a high likelihood of success.
