RBI exempts Swamih fund from AIF curbs

MUMBAI: RBI has exempted Swamih, a government-backed fund for stalled real estate projects, from its tightened rules for alternate investment funds. Established in 2019 and managed by SBICAP Ventures, a unit of the State Bank of India, Swamih channels debt to affordable and mid-income housing projects that have run into financial trouble.Last year, the RBI tightened rules to curb indirect lending risks. Banks and non-banking financial companies investing in an AIF were required to hold higher provisions if they also lent to the projects financed by that fund. The aim was to prevent "evergreening" of loans, a practice in which troubled loans are rolled over to avoid classification as non-performing.The exemption for Swamih removes that double-provisioning requirement, lowering the capital cost for banks and making it easier for them to finance stalled projects. The government argued that the fund serves a socio-economic purpose, rescuing projects crucial to affordable housing and broader economic activity.