The Reserve Bank of India (RBI) has announced that the Special Window for Affordable and Mid-Income Housing (SWAMIH) fund — a sovereign-backed real estate rescue fund — will be exempt from the tightened Alternate Investment Fund (AIF) regulations.
🏦 Background
Launched in 2019, the SWAMIH Fund was created to provide last-mile debt financing for stalled housing projects across India, particularly in the affordable and mid-income segments. It is managed by SBICAP Ventures, a subsidiary of the State Bank of India (SBI), which is also a major investor in the fund.
In 2023, the RBI had asked banks and non-banking finance companies (NBFCs) to increase provisioning for AIF investments — including sovereign ones — if they were also lenders to the same projects. This aimed to curb indirect lending risks and prevent loan evergreening.
⚖️ New Exemption
Responding to government requests, the RBI’s latest notification exempts sovereign-backed funds like SWAMIH, recognizing their “socio-economic purpose” in supporting affordable housing and economic stability.
Under the general framework:
- A single regulated entity can invest up to 10% of an AIF’s corpus.
- Combined lender exposure to any AIF is capped at 20%.
The exemption allows SWAMIH to continue operations more flexibly, ensuring smoother funding for projects vital to India’s urban development and housing supply.
💡 Strategic Significance
The move signals the RBI’s intent to balance regulatory prudence with developmental goals, supporting the government’s housing-for-all mission while maintaining oversight of private AIF risks.