The Reserve Bank of India has exempted the government-backed SWAMIH fund from its alternate investment fund (AIF) regulations, offering relief to the real estate rescue vehicle set up to revive stalled housing projects. The move follows the Centre’s request to ease norms for sovereign-supported funds with a broader socio-economic mandate.

The fund, named the Special Window for Affordable and Mid-Income Housing (SWAMIH), was established in 2019 to assist struggling real estate projects with debt financing for halted housing initiatives.

SWAMIH is managed by SBICAP Ventures, a subsidiary of the government-owned State Bank of India, which is also a significant investor in the fund.

Last year, the RBI mandated that banks and non-banking finance companies increase their provisions for AIF investments, including sovereign funds, particularly when they were also lending to the projects involved. These tighter regulations, aimed at curbing indirect lending risks and potential loan ever-greening, saw some relaxation in March. Subsequently, the government requested an exemption for sovereign-backed funds, highlighting their “socio-economic purpose”.

Currently, an entity’s investment in any AIF is limited to 10% of the scheme’s corpus, with the total combined investment by all lenders capped at 20%.