SWAMIH FUND

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Context

• SWAMIH Fund completed 20,557 homes since its inception in 2019.

SWAMIH FUND

• In 2019, the central government launched the ‘Special Window for Funding Stalled Affordable and Middle-Income Housing Projects’ or ‘SWAMIH’ Scheme.
• The objective of the scheme is to provide priority debt financing for the completion of stalled housing projects falling under the affordable and middle-income housing categories. This ‘last mile financing’ of stalled projects will be extended through a Category-II AIF (Alternate Investment Fund) debt fund registered with the Securities and Exchange Board of India (SEBI).
• SWAMIH is India's largest social impact fund specifically formed for completing stressed and stalled residential projects.
• The fund is sponsored by the Ministry of Finance and is managed by SBICAP Ventures Ltd., a State Bank Group company.

Why was the SWAMIH fund introduced?

• The central government stated that the SWAMIH fund was launched to provide relief to real estate developers that require funding to complete their unfinished projects and consequently ensure the timely delivery of homes to the home-buyers. It is expected that the scheme will aid the growth of the real estate sector in India.

Role of the Central Govt and Investment Manager in Managing the Fund

• SBICAP Ventures Limited is the Investment Manager of the SWAMIH fund.
• The role of the Investment Manager will be to undertake fund-raising, carrying out investments and managing the fund team. SBICAP Ventures Limited is a wholly-owned subsidiary of the State Bank of India.
• The Central government through the Department of Economic Affairs, is the sponsor of the SWAMIH fund.

Eligibility of projects to receive SWAMIH funding

• The real estate projects seeking last-mile funding from SWAMIH must be RERA-registered projects which have been stalled due to a lack of adequate funds.
• They must also fall under the ‘Affordable and Middle-Income Project’ category.
• Net-worth-positive projects are also eligible for SWAMIH funding.
• Finally, each of these projects must be very close to completion.
• Net-worth positive projects are those projects for which the value of their receivables (debts owed to them by buyers), plus the value of their unsold inventories is greater than their completion costs and outstanding liabilities.

Affordable and Middle-Income Housing under SWAMIH

• The government has defined an ‘affordable and middle-income projects’ as those projects in which the flats do not measure more than 200 square metres in carpet area and are priced as below:
  • Upto INR 2 crore in the Mumbai Metropolitan Region
  • Upto INR 1.5 crore in the National Capital Region, Chennai, Kolkata, Pune, Hyderabad, Bangalore and Ahmedabad
  • Upto INR 1 crore in the rest of India.

Note: SEBI defines a Category-II AIF (Alternate Investment Fund) debt as a fund which does not undertake leverage or borrowing other than to meet day-to-day operational requirements. Real estate funds, private equity funds (PE funds), funds for distressed assets are all Category-II AIF funds.

Evaluation

• SWAMIH or Special Window for Affordable and Mid-Income Housing investment fund has so far provided approval to about 130 projects with sanctions worth over Rs 12,000 crore, and in three years since inception in 2019.
• It has already completed 20,557 homes and aims to complete over 81,000 homes in the next three years across 30 tier 1 and 2 cities.

PRACTICE QUESTION Q) Which of the following statements is/are incorrect? a. SBICAP Ventures Limited is the Investment Manager of the SWAMIH fund. b. In 2015, the central government launched the ‘Special Window for Funding Stalled Affordable and Middle-Income Housing Projects’ or ‘SWAMIH’ Scheme.  I. Only a II. Only b III. Both a and b IV. Neither a nor b Answer: Option II

 

https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1904147