The Reserve Bank of India (RBI) has granted an exemption to the Special Window for Affordable and Mid-Income Housing (SWAMIH) fund from its stringent regulations governing Alternative Investment Funds (AIFs).

Key Highlights

• RBI exempts SWAMIH fund from stringent AIF regulations to support stalled housing projects.
• Exemption facilitates continued debt financing for affordable and mid-income housing sectors.

Established in 2019 and managed by SBICAP Ventures, a subsidiary of the State Bank of India, SWAMIH focuses on providing debt financing to distressed real estate projects, particularly in the affordable and mid-income housing sectors.

Previously, the RBI had imposed stricter rules requiring banks and non-banking financial companies (NBFCs) to increase provisions for AIF investments, especially when they were also lenders to the projects funded by these AIFs.

These measures aimed to mitigate indirect lending risks and prevent the evergreening of loans. However, following representations from the government highlighting the socio-economic importance of sovereign-backed funds like SWAMIH, the RBI has decided to exempt SWAMIH from these curbs.

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This exemption is expected to facilitate the continued support of SWAMIH to stalled housing developments, thereby contributing to the government's efforts to address the housing shortage in India. The move underscores the RBI's recognition of the unique role played by sovereign-backed funds in promoting affordable housing and supporting economic growth.