Union Government’s recent decision to set up a stress fund has sent a positive signals in the Indian real estate market as the realtors have been demanding the same for a long time. Presently, there are 1500+ stalled residential projects with over 4.50 lakh incomplete apartments and this is giving buyers sleepless nights. Hence, the formation of this corpus will speed up the construction and will bring the property market back on track.
You must have heard about the creation of Alternate Investment Fund for real estate and here we let you know everything about the AIF. So, scroll down the post to read more.
1. What is Alternate Investment Fund?
AIF i.e. the Alternative Investment Fund is a stress fund investment vehicle that collects funds from multiple investors while abiding by the investment guidelines framed by the Reserve Bank of India (RBI). The Union Government opened the fund with Rs. 25,000 crores and will contribute Rs. 10,000 crore to the same while the remaining amount of Rs. 15,000 crores will be raised from several funding players like SBI, LIC and others who have expressed interest in the Alternative Investment Fund.
2. Benefits of AIF for Real Estate Sector
The property market is facing liquidation issues and the introduction of stress fund has come at a right time. There are several benefits of Alternate Investment Fund for the market like:
- Projects costing below Rs. 2 crores per unit in Mumbai can be completed with this financial assistance.
- AIF will assist the completion of Residential projects with units valued under Rs 1.5 crore in other cities excluding the metros like Delhi-NCR and Mumbai.
- Fund will allow completion of stalled projects with a net worth below Rs. 1 crore per unit in tier-II cities.
- Stress fund assistance will be allocated to all RERA registered projects across the country.
- The developers with positive net worth for stalled projects will be considered for financial aid. However, the projects with negative valuations will not get assistance under this stress fund.
- Stalled projects announced as the non-performing asset [NPA] will receive financial aid under the Alternate Investment Fund.
- Stalled project facing proceedings under NCLT [National Company Law Tribunal] will also be considered for fund allocation under AIF.
- Financial aid will not be offered to the projects for which liquidation is already announced.
- Funds will be allocated at priority for the affordable and mid-income homes/residential projects.
This fund creation will not only boost the Indian real estate sector but will also give a push to cement, iron and steel industries.
Also Read : RERA Rules every Home Buyer Must Know