Government announces a stress fund to revive stalled projects

The Government has announced a Rs. 20,000 crore stress fund for real estate on 14th September 2019 that would help revive many stalled housing projects in Maharashtra. However, it may not cover projects in Mumbai city due to higher price value according to Gautam Chatterjee, Chairman of the Maharashtra Real Estate Regulatory Authority (MahaRERA).

According to Chatterjee, the Finance Ministry’s initiative to create the stress fund fits well with MahaRera’s efforts to help complete several projects which have been stalled due to lack of last mile funding.

Even after the MahaRERA has set out a blueprint of how to complete stuck projects, most times there is a shortfall of money to do so according to Chatterjee. “We would feel that this stressed fund would be a heavenly blessing to see these projects get through,” he said, adding that the projects comprise those which have not been declared as non-performing assets by banks, nor have they slipped into the moratorium of National Company Law Tribunal (NCLT).

According to Chatterjee, at present, MahaRERA is working with homebuyers and various stakeholders to help revive around 12 stressed projects in Maharashtra. There are close to 100 such projects in the pipeline where homebuyers have approached RERA for a resolution. However, the stressed fund would not cover the high value projects in south Mumbai or parts of Mumbai. But most of Maharashtra is likely to benefit by this move.

NCLT resolution would lead to a haircut and expulsion of the developer. A new developer may be brought in who may buy the project at a reduced value. In this case, RERA would try and arrive at a blueprint on how much money, time and resources would be required to complete the last mile.