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The Reserve Bank of India (RBI) has exempted the government-supported Special Window for Affordable and Mid-Income Housing (SWAMIH) fund from its recently tightened regulations on alternate investment funds (AIFs). Established in 2019 to provide financial relief to delayed housing projects, the SWAMIH fund is managed by SBICAP Ventures, a subsidiary of the State Bank of India (SBI), which also holds a major investment stake in the fund. The move follows the government's appeal for exemption on the grounds of socio-economic importance.
The Reserve Bank of India (RBI) has granted an exemption to the government-backed Special Window for Affordable and Mid-Income Housing (SWAMIH) fund from its revised regulations for alternate investment funds (AIFs), as stated in a notification issued earlier this week. Advertisement
SWAMIH, which was launched in 2019, was designed to provide debt financing to stalled or delayed housing projects in the affordable and mid-income segments. The initiative aims to offer relief to developers struggling with liquidity constraints and to ensure completion of housing projects that had been left incomplete due to funding challenges.
The fund is managed by SBICAP Ventures, a subsidiary of the State Bank of India (SBI). The state-owned lender is also one of the principal investors in the fund.
In the past year, the RBI had directed banks and non-banking financial companies to increase provisions for their AIF investments - including sovereign and government-backed funds - if they were simultaneously lenders to the projects supported by these AIFs. These guidelines were part of the regulator's broader efforts to limit indirect lending exposure and prevent potential ever-greening of loans. While the norms were partially relaxed in March, the government had subsequently requested that sovereign-supported funds be exempted, citing their socio-economic intent and contribution to public welfare.
Under the existing regulatory structure, an individual regulated entity's investment in any AIF is capped at 10% of the fund's total corpus, with the collective investment by all lenders restricted to 20%.
The RBI's decision to exempt the SWAMIH fund from its tightened AIF framework underscores the government's emphasis on supporting affordable and mid-income housing projects facing financial distress. The exemption aligns with the socio-economic intent of the fund, ensuring smoother project completion and safeguarding homebuyers' interests. It also reflects the regulator's effort to balance financial prudence with the need to sustain momentum in India's housing recovery sector.
Source - Reuters
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