Funding a Stalled Real Estate Project: SWAMIH, AIF or ARC

A stalled project is rarely a bad project — it’s usually a viable one starved of its final tranche of capital. The construction is part-done, buyers are waiting, and the developer is out of money or out of the lenders’ favour. The good news: there are three distinct routes to completion capital in India, and at least one usually fits. The skill is choosing correctly.

In short: Last-mile funding for stalled projects comes from three routes — the government-backed SWAMIH fund (cheapest, but only for RERA-registered, net-worth-positive affordable/mid-income projects), Category-II AIF special-situations capital (faster and more flexible, costlier), and ARC-led restructuring (where the existing debt itself needs resolving). A project can qualify even if the developer is an NPA or in NCLT.

Route 1: The SWAMIH fund

SWAMIH (Special Window for Affordable and Mid-Income Housing) is a government-sponsored fund that provides senior, secured last-mile debt to complete stalled housing. It is the cheapest completion capital available — but the eligibility is specific:

• The project must be RERA-registered
• It must be net-worth-positive at the project level — crucially, this is assessed on the project, so it can qualify even if the developer entity is an NPA or in NCLT
• It must be in the affordable / mid-income segment, within prescribed price caps (broadly ₹2 crore in MMR, ₹1.5 crore in other major metros, ₹1 crore elsewhere)
• The project must be stalled but viable to complete

A practical note on timing: SWAMIH Fund I is fully committed, and a second SWAMIH fund announced in the 2025-26 Union Budget is not yet operational as of mid-2026. So for live mandates, SWAMIH is positioned as a route to prepare for as it reopens, while the deployable routes today are AIFs and ARCs.

Route 2: Category-II AIF special-situations capital

Where SWAMIH doesn’t fit — a premium or non-affordable project, a need for speed, or a more complex structure — Category-II AIFs running special-situations strategies step in. They are faster and far more flexible on asset class and structure than SWAMIH, at a higher cost. This is the workhorse route for stalled projects outside the affordable segment, and it is deploying now. (See structured / AIF finance.)

Route 3: The ARC route

Where the problem isn’t just a funding gap but the existing debt itself — a defaulted facility that needs restructuring or settlement — an Asset Reconstruction Company (ARC) route may be the answer. This resolves the legacy debt so the project can be completed on a clean footing, sometimes alongside fresh AIF capital.

Choosing between them

The decision turns on eligibility and the nature of the stress. The mistake is spending months pursuing SWAMIH for a project that was never eligible, while the AIF route that would have worked sat unused.

What every route underwrites on

Whatever the route, the funder is underwriting two things: a credible cost-to-complete and a clean sales waterfall showing how the completion capital gets repaid. Re-modelling these honestly — not optimistically — is the foundation of a fundable stalled-project file.

Where an adviser helps

A neutral adviser assesses all three routes against your project’s eligibility and stress level, re-models the cost-to-complete, and places the file with the source that will actually finish it. At Finnova, this is CA + ex-banker–led, with no fund to push — see last-mile funding.

Key takeaways

• Three routes: SWAMIH (cheapest, strict eligibility), Category-II AIF (flexible, costlier), ARC (when debt needs resolving).
• SWAMIH assesses the project, not the developer — an NPA or NCLT developer can still qualify.
• SWAMIH Fund II is not yet operational (mid-2026); AIF and ARC routes are deploying now.
• Every route underwrites on a credible cost-to-complete and sales waterfall.

FAQ

Can a stalled project get funding if the developer is an NPA or in NCLT? Yes. SWAMIH assesses eligibility at the project level, so a stalled but viable project can qualify for completion funding even where the developer entity is an NPA or in NCLT. Category-II AIF special-situations capital is also designed for exactly these distressed-but-viable cases.

What is the SWAMIH fund and who qualifies? SWAMIH provides senior last-mile debt to complete stalled affordable and mid-income housing. A project must be RERA-registered, net-worth-positive at the project level, within prescribed price caps, and stalled but viable. See what is SWAMIH.

Is the second SWAMIH fund available yet? A second SWAMIH fund was announced in the 2025-26 Budget but is not yet operational as of mid-2026. For live mandates, the deployable routes are Category-II AIFs and ARCs, while positioning the file for SWAMIH II as it opens.

SWAMIH vs an AIF — which is cheaper? SWAMIH is the cheapest completion capital, but only for eligible affordable/mid-income projects. A Category-II AIF is more expensive but faster and open to premium and complex projects. We assess both against your project before recommending a route — see last-mile funding.