SWAMIH Fund

Recently, the SWAMIH (Special Window for Affordable & Mid-Income Housing) fund has made its first complete exit from an investment made for the completion of a residential project in Mumbai.

Context

Recently, the SWAMIH (Special Window for Affordable & Mid-Income Housing) fund has made its first complete exit from an investment made for the completion of a residential project in Mumbai.

About

• Special Window for Affordable & Mid-Income Housing fund is a government-backed fund that was set up as a Category-II AIF (Alternate Investment Fund) debt fund registered with SEBI (Securities and Exchange Board of India), which was launched in 2019.
  • The liquidity squeeze and the cash trap situation the real estate sector faced in 2019 made things even more difficult, prompting the government to introduce the program.
  • Liquidity squeeze or cash trap is a situation in which interest rates are lower for investors to prefer savings rather than investing.
• The Investment Manager of the fund is SBI (State Bank of India) CAP Ventures, a wholly-owned subsidiary of SBI Capital Markets, which in turn is a wholly-owned subsidiary of SBI.
• The Sponsor of the fund is the Secretary, Department of Economic Affairs, Ministry of Finance, on behalf of the Government of India.
• Aim: To provide financing to enable completion of stalled housing projects and ensure delivery of apartments to homebuyers.

Eligibility criteria

• The real estate projects seeking last-mile funding from SWAMIH must be the Real Estate (Regulation and Development) Act (RERA)-registered which has been stalled due to a lack of adequate funds.
  • Each of these projects must be very close to completion.
• They must also fall under the category ‘Affordable and Middle Income Project’ (any housing projects where houses do not exceed 200 sq.m.).
• Net-worth positive projects are also eligible for SWWAMIH funding.
• Net-worth positive projects are those projects for which the amount of their receivables (debts owed to them by buyers), plus the value of their non-selling assets is greater than their completion costs and outstanding liabilities.

Significance of Fund

• It helps to unlock liquidity in the real estate sector and provides a boost to core industries such as cement and steel.