India comes to housing sector’s rescue with $1.4bn fund

But are developers impressed?

The Indian finance ministry has announced a raft of measures aiming to relieve the housing sector, BloombergQuint is reporting.

The government will contribute INR10,000 crore (USD1.4 billion) to the creation of a special fund designed to offer last-mile funding to housing projects delayed by the liquidity crunch.

The state-run National Investment Infrastructure Fund and Life Insurance Corp. of India are already on board, while sovereign wealth funds, banks, and domestic financial institutions are expected to match the contribution.

The announcement received some criticism from the Confederation of Real Estate Developers Association of India, however.

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“Looking at the grave situation of the real estate industry, I think this is not enough. The government has just scratched the surface,” Jaxay Shah, national chairman of the confederation, told BloombergQuint.

“We would’ve been more happy if the ECB bit directly benefited the developer instead of the HFC or the customer.”

Affordable and mid-income developments will be the focus of the fund, with the caveat that they are not already non-performing assets or facing insolvency proceedings. This could end up being restrictive to the number of developments that can qualify for the funding, Keki Mistry, chief executive officer of HDFC Ltd., pointed out to BloombergQuint.

If a developer has not made three monthly installments to the lending bank, a development will be classed as a non-performing asset, Mistry noted.