Government Urges Banks to Speed Up Resolution of Stalled Housing Projects

The government is pushing for quicker resolution and completion of stalled housing projects. Banks have been asked to compile and share a list of these projects under the SWAMIH fund, which supports the completion of stressed projects.

Discussions with stakeholders revealed that procedural delays are the main reason for lower involvement of public sector banks (PSBs) in the SWAMIH fund. An official noted that the existing regulatory mechanisms have limitations in resolving such projects effectively. Feedback highlighted the success of the SWAMIH fund but also emphasized the need to scale up due to the large number of stalled projects.

Lenders will share feasibility reports with the fund, which finances the completion of stressed projects. SWAMIH-I has returned over 25% of drawn capital to investors and completed over 26,000 apartments.

Recent amendments by the Insolvency and Bankruptcy Board of India prevent liquidators from selling housing units already allotted and in possession during the liquidation process. Suggestions include sharing progress updates of the SWAMIH fund with stakeholders.

The Indian Banks’ Association estimated that 412,000 stressed dwelling units worth ₹4.08 lakh crore are impacted by stalled real estate projects, with a large portion in the national capital region.

Banks have approached the RBI seeking exemption for the SWAMIH fund from guidelines restricting investments in alternate investment funds (AIF) where the investing entity has lent or invested. They argue that as the government sponsors the fund, exemptions are necessary for its continuity.