SWAMIH-2 Fund: Government to Revive 1 Lakh Stalled Housing Projects

The Indian government is finalising the contours of the SWAMIH-2 Fund and is expected to operationalise it soon. This fund is designed to provide last-mile financing for the completion of stalled housing projects, offering relief to nearly one lakh middle-class homebuyers whose investments are currently stuck. Despite paying their EMIs (Equated Monthly Installments) on loans taken for apartments, these homebuyers have been left in limbo due to project delays and financial distress.

For this purpose, the government has already earmarked Rs 1,500 crore as a seed capital for the Special Window for Affordable and Mid-Income Housing (SWAMIH) Fund in the Budget 2025-26. The mandates for the new fund are being finalised, and clearance is expected to be granted soon. The fund will provide last-mile funding for commercially viable projects, thereby unlocking investment in stalled residential projects.

The concept of the SWAMIH Fund was first introduced in November 2019, when the Centre announced a stress fund named SWAMIH to complete stalled housing projects across India. A 'Special Window' in the form of an Alternative Investment Fund (AIF) was created to provide priority debt financing for the completion of stalled housing projects. SBI Ventures was assigned the role of Investment Manager for this special window, and the Sponsor of the Fund is the Secretary, Department of Economic Affairs, Ministry of Finance.

Under the SWAMIH Fund-1, over 55,000 dwelling units in stressed housing projects have been successfully completed. The fund aims to deliver another 30,000 homes over the next 3-4 years. The Fund currently has about 30 investment professionals, with an average of 15 years of industry experience.

To date, SWAMIH Fund-1 has raised Rs 15,530 crore, with the goal of providing priority debt financing for the completion of stressed, brownfield, and Real Estate Regulatory Authority (RERA) registered residential projects that fall into the affordable and mid-income housing category. The fund considers first-time developers, established developers with troubled projects, developers with a poor track record of stalled projects, customer complaints, and NPA accounts, as well as projects with litigation issues. As such, it is often seen as the lender of last resort for distressed projects.

A study commissioned by SBI Ventures Ltd in 2019, conducted by data analytics firm PropEquity, estimated that about 1,500 projects with 4.58 lakh housing units were stalled or stressed and required aggregate funding of Rs 55,000 crore to complete the stalled projects. The SWAMIH-2 Fund aims to address a significant portion of this funding gap, providing much-needed relief to homebuyers and developers alike.