Special Window Fund for Affordable Real Estate Segment: Achche Din for Home-buyers?

– Sikha Bansal and Priya Udita


Relief has come to the builders of stalled housing project and distressed homebuyers in in the form of establishment of a ‘Special Window‘ fund by the Government to provide priority debt financing for the completion of stalled housing projects that are in the affordable and middle-income housing sector. See the press release here. The announcement came after this package was introduced on September 14 by the Finance Minister. The Government has also issued FAQs on the same, which can be viewed here.

The write-up discusses salient features of the plan.


  1. Fund will be set up as Category II-AIF (Alternative Investment Fund) with initial amount of Rs. 25,000 crores and registered with SEBI.
  2. The government acting as a sponsor shall infuse Rs. 10,000 crore and the remaining amount to be contributed by State Bank of India, Life Insurance Corporation of India and other institutions.
  3. Investors can be Government and other private investors including cash-rich financial institutions, sovereign wealth funds, public and private banks, domestic pension and provident funds, global pension funds and other institutional investors.
  4. The SBICAP Ventures Limited is proposed to the Investment Manager.
  5. Project declared as non-performing assets (NPAs) or which have been dragged to the NCLT for insolvency proceedings will be included. Apart from that any projects undergoing corporate insolvency resolution process before the NCLT will be considered for funding through the Special Window upto the stage where the resolution plan for such insolvency resolution process has not been approved / rejected by the committee of creditors. However, cases pending in the High Courts or Supreme Court will not be considered.
  6. The retail loans of the selected stalled projects will be restructured as per RBI Guidelines and bank board approved policies.
  7. The investments will be in the form of non-convertible debentures subject to legal, regulatory or other considerations.

Eligibility of the PROJECTS

  1. Stalled for lack of adequate funds
  2. Affordable and Middle Income Category
  3. Net worth positive projects (including NPAs and projects undergoing NCLT proceedings)
  4. RERA registered
  5. Priority for projects very close to completion.

Affordable and Middle Income Category– The term ‘affordable housing’ in defined in multiple ways. For the purpose of this special allowance, the Government of India has defined the term ‘affordable and middle income category as – any housing projects wherein housing units do not exceed 200 sq. m. RERA carpet area and are priced as below:

  • Upto or less than INR 2cr in Mumbai Metropolitan Region
  • Upto or less than INR 1.5cr in National Capital Region, Chennai, Kolkata, Pune, Hyderabad, Bangalore and Ahmedabad
  • Upto or less than INR 1cr in the rest of India

Whereas, as per Ministry of Housing and Urban Poverty Alleviation[1], projects using at least 60% of the FAR/ FSI for dwelling units of Carpet Area not more than 60 sq.m. will be considered as Affordable housing projects.  Such projects can have a mix of economic weaker section (EWS)/lower income group (LIG)/higher category DUs and commercial units. Provision of servant’s quarters along with the main dwelling unit will not be counted as dwelling units for EWS/LIG under Affordable Housing (AH) project.

Net worth positive shall mean those projects where the value of receivables plus the value of unsold inventory is greater that the completion cost and outstanding liabilities at the project-level.


  1. All applications for financing would be reviewed by the investment committee of the fund for approval, after due-diligence and discussions with existing lenders and legal advisors.
  2. The investment manager shall make a detailed investment review including inputs provided by external due diligence agencies. This monitoring mechanism will be part of the contractual arrangement with the developers as part of funding and approval of the fund investment. After the documentation is completed, disbursements would happen.
  3. Investment manager along with developer / appointed project management companies shall ensure that the end use of funds is only for the purpose of completing the project.
  4. No time frame has been given for the completion of the project. However it is recommended that it must be construction must be completed at the earliest.
  5. If the developer in incapable, as part of the investment review, the Investment Manager will take a call if there is any need to change the developer for the project.
  6. As to involvement of home-buyers, will be required to work with their financing institution (NBFC/HFC/Banks) to honour their obligations to provide balance instalments of home loans, enabling early completion of the project.


The investment will act as lubricant to revive the stalled projects benefiting the real estate economy as a whole. This will surely create a multiplier effect where the funds provided to the stalled projects will assist in unlocking the total value of the project. Further this construction financing will benefit home-buyers who have invested their hard-earned money as it will lead to early completion and timely possession of homes. By implementing this scheme, the government intends to fill the gap required to kick start the real estate sector. The move may be expected to bring good days for the otherwise dwindling real estate market and worried home-buyers, who are moving door to door to have their grievances addressed. However, the effectiveness of this will depend on proper monitoring on use of funds and stipulation of strict timelines.

[1] http://mohua.gov.in/upload/uploadfiles/files/6AHP-Guidelines.pdf

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