VIDEO

SBICap Ventures is making a special effort to reach out to developers who could be eligible for funding under the Special Window for Affordable and Mid-Income Housing announced by the Government of India.

In this video, the Chief Investment Officer of the SWAMIH Investment Fund I, makes a detailed presentation in a meeting with developers organised by CREDAI and MCHI in Mumbai recently. Such interactive sessions have been earlier held in major metros across the country.

1. Which project is eligible for funding ?
A Project should satisfy the following criteria to be eligible for funding :
  • Is stalled or likely to be stalled if no funding is made available
  • Atleast 90% of the available FSI / FAR is being developed as Affordable Housing units or Mid-Income Housing units;
  • Is networth positive – value of sold receivables plus unsold inventory is greater than cost to complete construction and to service the investment by the Fund;
  • Has completed at least 30% of the construction and development
  • Requires last mile funding – sufficient to complete construction
  • Is a part of a RERA registered project.
2. What is net worth positive criteria ?

A project is considered networth positive if the value of sold receivables plus unsold inventory is greater than cost to complete construction and to service the investment by the Fund.

3. Is this funding available for new projects ?

No. This funding is available only for projects that have completed at least 30% of the construction and development required.

4. How are Affordable and Mid-Income Projects defined ?

The Investment Manager has defined Affordable or Mid-income Housing units as any housing units that do not exceed 200sqm RERA carpet area and are priced as following (as applicable):

  • Less than INR 2cr in Mumbai Metropolitan Region;
  • Less than INR 1.5cr in National Capital Region, Chennai, Kolkata, Pune, Hyderabad, Bangalore and Ahmedabad;
  • Less than INR 1cr in the rest of India;

“Carpet Area” shall have the meaning as assigned to it in clause (k) of section 2 of RERA as follows: Carpet Area means the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment.

5. What is RERA carpet area ?

Clause (k) of section 2 of RERA defines Carpet Areas as follows: Carpet Area means the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment.

6. Is RERA registration required ?

Yes. The project under consideration should be a part of a RERA registered project.

7. Is this funding available only for certain cities ?

No, the project could be located in any city or town, anywhere in India as long as it meets all the other qualifying criteria.

8. How much funding shall be provided ?

Funding should be sufficient to complete the project without any reliance on additional capital at a later stage.

9. What is the nature of the funding provided ?

The Fund expects to primarily structure its investments in the form of Non-Convertible Debentures. That shall have a priority charge on the assets and cash flows of the project. This funding shall be used only for completion of the stalled project and for purposes as approved by the IC.

10. Can this funding be used to repay existing lenders ?

No. This funding shall be used only for completion of construction of the stalled project and for purposes as approved by the IC. It can not be used to repay existing debt on the project.

11. Do I need a consent from the existing lenders in the project ?

Yes. A reference from existing lenders is required as they have to consent to the Fund providing senior capital for the project.

12. For a Non Objection Certificate (NOC) from the bank, whom should we contact?

The Fund requires a NOC for ceding senior charge from the existing lenders in the project. Each bank has a nodal officer for their projects which might seek SWAMIH funding. Please take the help of your dealing officer to contact the nodal officer. A list of nodal officers at the various banks is as follows:

 

Serial No Bank Nodal Officer Contact No Email ID
1 Punjab National Bank Mr. Raman Grover 9599042113 ramangrover@pnb.co.in
2 United Bank of India Mr. Dhananjay Pratap Singh 033-2213-5108 NA
3 Oriental Bank of Commerce Mr. Sunil Chugh 9619673546 sunilchugh@obc.co.in
4 Central bank of India Mr. K K Taneja 7045103557 gmcredit@centralbank.co.in
5 Union Bank of India Mr. Naveen Jain 022-22896823/776989939 naveenjain@unionbankofindia.com
6 Bank of India Mr. Vijay Kumar Dunani 022-6668 4997/9869213476 vijay.dunani@bankofindia.co.in
7 State Bank of India Sri. Partha Sen 022-22741260 dgm1.ccg@sbi.co.in
8 Bank of Baroda Mr. R Sureshvaran 022 66985813/9003326764 sureshvaran.reghunathan@bankofbaroda.com
9 Bank of Maharashtra Mr Prashant Khatavkar 020-25614405, 07738615612 email-gmacc@mahabank.co.in
10 Indian Overseas Bank Mr. B Ankata Ratna Patro 044 2851 9434/ 94477 93669 barpatro@iobnet.co.in
11 IDBI Bank Mr. M. Saravanan 7760185715/022-66552230 m.saravanan@idbi.co.in
12 Indian Bank Mr. K. JaiKumar 044 2813 4593/ 9831022372 N.A.
13 Punjab and Sind Bank Praveen Kumar Arora 9920277630 ho.imd@psb.co.in
14 UCO Bank Mr. Ram Kumar 9903057616
15 Canara Bank Mr. S Ravindran 9449862634 sravindran@canarabank.com
13. Do I need to approach you through an intermediary ?

No. It is not a necessary requirement to have an intermediary. There is also no preferred intermediary for the Fund. However there must be someone, either in your company or outside it, who is authorised to and capable of giving us financial and technical information about the project so that we can process this application

14. What information do I need to submit ?

We would need detailed quarterly information on the project cash flows. The initial information required can be downloaded from here Please complete and send that information to ahf@sbicapventures.com

15. To whom should I send the project information or application for funding ?

Please complete and send the project information in the format given in question 15 to ahf@sbicapventures.com

16. Do I need to visit and meet you to discuss the project ?

We will call upon you for additional clarifications and information after we have had a chance to review the information sent to us at ahf@sbicapventures.com We will meet you only after we have had a chance to review the information and with a prior appointment only.

17. Are there any application processing fees ?

No. The Fund does not charge any application processing fees.

18. What is the role of the Government of India, SBI and LIC in this fund ?

The Government of India, SBI and LIC are the biggest investors in this fund that shall provide the capital. None of these investors have any role in the decision making process for investments.

19. Does the Fund provide capital to projects being developed by partnership firms or individuals?

Yes, the Fund requires that the individual or partnership firm incorporates a new private limited company to develop the project. The cost of transfer of assets to this private limited company can be considered as part of the cost of the project for which funding is required. Once that is done, the Fund can provide the capital required to complete the project if it meets the rest of it’s investment criteria.

20. Does the Fund require home buyers to forgo any interest or other penalties against the developer in stressed projects?

The Fund can provide capital for construction and completion of net worth positive projects only. A project can be considered net worth positive only if the value of sold receivables plus unsold inventory is greater than cost to complete the project and to service the investment by the Fund. In some cases, a project would be net worth negative if the Fund has to factor in all potential penalties such as interest / compensation / refunds payable to home buyers along-with the balance project cost that is required to be funded to complete the project. The project will then not meet the funding eligibility criteria for the Fund.

Hence, in most of the SWAMIH funded projects, we stipulate a condition in our transaction documents that all such potential penalties / compensation will not be considered as part of project costs and will be funded by the developer from its own sources. However, in select cases, given the past history of the project and likelihood of such risks, the Fund is also requesting that the developer obtains a confirmation from the home buyers to agree to a new extended possession date in agreement with home-buyers and also revised RERA completion date. This will have the effect of a reduction in the potential liabilities to make the project net worth positive and enable the project to meet the funding eligibility criteria. Then the Fund can provide the capital to be used to complete such projects.

This is done in the larger interest of the home-buyers awaiting delivery of stressed projects while still ensuring that the project is a viable investment for the Fund.

21. Should customers (home buyers) approach the SWAMIH Investment Fund I for grievances /complaints /clarifications in respect to the project funded/proposed to be funded by the Fund?

For all project related information, the customer should approach the developer. We, as the financier, shall endeavor that adequate information regarding project progress is published on the project portal or communicated to the customers in some form. The Fund shall not be in a position to respond to individual customers queries in relation to the project being funded.

22.How does the Fund ensure that the developer honours all its commitments made to the homebuyers with respect advertised amenities and to quality of the construction and timelines?

The Fund shall generally implement asset management processes to ensure that project cash flows are utilized for the progress of the project only and as agreed with the developer in the investment documents. This is done with effective escrow mechanisms and assistance of external project management agencies who visit the projects regularly to ensure that the project progress is satisfactory.

However, neither the Fund, nor its PMC shall be responsible, in any manner, to ensure that advertised amenities are delivered or quality, timelines and other commitments that may have been made by developer to homebuyers are honoured. The responsibility for advertised amenities, quality, timelines for delivery and all other commitments to homebuyers shall continue to be with the developer only as the Fund is only a financial investor and does not have any part in managing the operations or execution of the project.