The Finance Minister of India, Nirmala Sitharaman announced the SWAMIH Fund 2 worth Rs.15,000 with the aim to complete and deliver 1 lakh housing units. The initiative received positive response with the delivery of 50,000 homes in SWAMIH Fund 1, and another 40,000 homes to be delivered by 2025. This initiative was introduced for the home buyers to ease their financial burden. But how does the SWAMIH Fund help to ease the financial burden of home buyers and why it is important. Let’s start by understanding the SWAMIH Fund?

What is the SWAMIH Fund?

SWAMIH Fund is one of the largest social impact initiatives of India that is managed by SBICap Funds. The full form of SWAMIH Fund is The Special Window for Affordable and Mid-Income Housing Fund. The initiative aims towards reviving the delayed or stalled residential projects. In this initiative, the Finance Ministry provides support which acts as a last resort for stalled developments, be it due to legal challenges, financial challenges or NPAs. 

 The fund helps revive projects halted due to legal issues by offering debt financing when the projects are stuck in litigation*, allowing them to get over financial barriers and deliver the project to buyers irrespective of the ongoing legal disputes. This is beneficial for both affordable and mid-level housing projects which would otherwise get halted or delayed due to the legal challenges. The funding helps ensure that the projects get completed and delivered on time to the home buyers. 

What is litigation?

The process of resolving legal conflicts or disputes through court is called litigation. It usually involves two or more than two parties seeking resolution for their disagreement through legal proceedings. 

When was the SWAMIH Investment Fund launched?

The SWAMIH Fund was launched in Nov. 2019. by Smt. Nirmala Sitharaman, the Finance Minister of India. It was set up as a “Special Window” to provide debt financial to developers towards the completion of halted housing projects. The fund is provided to RERA-registered and stalled mid-income and affordable housing projects. 

Benefits of SWAMIH Fund to Home Buyers and Developers 

The key benefits of SWAMIH Fund to Home Buyer and Developers are as follows:

• Ensure Timely Home Delivery

 Financial support provided to developers to complete halted or delayed residential projects registered under RERA, allowing home buyers to get the possession of their long-awaited homes. 

• Ease of Homebuyers Financial Burden

The initiative focuses on easing the financial burden of middle-class income families who are paying both rent of their current home and EMI towards their under-constructed home. With the sped-up construction of the halted projects, home buyers will get possession of their homes soon, and be free of the rent that they are paying on their temporary dwelling.

• Restore Trust of Homebuyers in Real Estate Industry

The delay or halt in construction makes home buyers feel insecure about their investment in the projects, as they are unsure whether the project will get completed and by when will they get the possession of the property. SWAMIH Fund ensures that projects get completed and delivered to home-buyers within a specified time, thus restoring consumers’ confidence in the real estate industry and boosting property sales. 

• Bringing Stability to Real Estate Industry

Allows developers to complete projects on time by offering financial support. This way, the risk of incomplete properties turning into NPAs (Non-performing assets) reduces significantly, improving liquidity in the real estate market as well as the financial sector.

Which projects are eligible under the SWAMIH Fund?

A project has to meet the following criteria to become eligible for SWAMIH Fund: 

•  The project is stalled or possesses the risk of being halted due to the shortage of funds. 
• At least 90 percent of the FSI (Floor Space Index) or FAR (Floor Area Ratio) is delegated to mid-income and affordable housing units. 
• The total value including the unsold inventory and sold receivables should be more than the cost needed for project completion and to service fund’s investment. 
• Minimum 30% of the development has already been completed. 
• Funding is required as a last resort to complete the project.
• The project should be registered under RERA. 

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