RBI Grade BNABARD ESISEBI
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Context:
“RBI MPC Unpacked: Key Theory Meets Today’s Macro Trends”Tap to play · from the C4S channel
The Reserve Bank of India (RBI) has granted an exemption to the Swamih Investment Fund—a government-backed initiative supporting stalled real estate projects—from its recently tightened regulations on Alternate Investment Funds (AIFs).
About Swamih Fund:
- Established: 2019
- Managed by: SBICAP Ventures, a subsidiary of the State Bank of India
- Objective: Provide debt financing to affordable and mid-income housing projects that have stalled due to financial difficulties
- Socio-economic significance: Supports completion of housing projects crucial for affordable housing and stimulates broader economic activity
RBI’s 2024 Tightened Rules on AIFs:
- Banks and Non-Banking Financial Companies (NBFCs) investing in an AIF were required to hold higher provisions if they also lent to projects financed by that fund.
- Purpose: Prevent evergreening of loans, a practice where troubled loans are rolled over to avoid being classified as Non-Performing Assets (NPAs).
Exemption Details:
- Swamih Fund is exempt from the double-provisioning requirement, reducing capital costs for banks.
- This facilitates greater investment in stalled real estate projects, enabling faster project completion and mitigating losses for homebuyers and developers.
