The move is likely to help 4.59 lakh housing units across the country. Only RERA-registered projects with positive networth will be provided funds.
Welcoming the decision, FPCE President Abhay Upadhyay said: "Names of the 1,600 identified projects that will receive funds need to be disclosed so that the home-buyers of those projects get a sigh of relief."
The construction activity should start immediately, he added.
"It would have been better if the whole process of identification of projects was more transparent and home-buyers were also made part of the same," Upadhyay said.
He further said, the government needs to ensure that "the funds are not directly disbursed to builders as they cannot be trusted anymore as still we have no mechanism to stop or even realtime track diversion of funds or its misuse."
Upadhyaya suggested formation of committee of home-buyers from the respective identified projects to monitor construction activities and to immediately bring to notice of concerned authorities of any wrong doing.
"It is necessary that committee of professionals entrusted with fund management has representative of home-buyers and very transparent mechanism is deviced for disbursal and end use of funds," he added.
Finance Minister Nirmala Sitharaman on Wednesday said the Alternative Investment Fund (AIF) will comprise Rs 10,000 crore coming from the government and the remaining being provided by state insurer LIC and the country's largest lender SBI.
The minister also said several sovereign funds have shown interest and may join the scheme at a later stage. The fund, to be set up as Category-II AIF registered with SEBI, will be managed by SBICAP Ventures Limited.
The AIF, which was first announced by Sitharaman on September 14, will act as a 'special window' to provide loans to over 1,600 incomplete affordable and middle-lower income housing projects.
Meanwhile, sources had said that about Rs 3.5 lakh crore has been invested in the over 1,600 stalled projects, and investment of Rs 55,000 crore to Rs 80,000 crore would be needed to complete them.
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