How to Raise Funds to Complete a Stalled Real Estate Project in India

A stalled housing project is rarely a dead project. Part of it is built, many units are sold and buyers are waiting. What is missing is the last tranche of money, and the right to put that money ahead of the old debt. This guide explains how to raise funds to complete a stalled real estate project in India, which routes are open as of October 2026, what each one needs, and why the existing lender's consent often decides the deal.

How to raise funds to complete a stalled real estate project in India: the short answer

Completion money for a stalled project comes from a funder who is repaid first from the project's remaining sales. To get it, a developer usually needs three things:

1. A project that is net-worth positive. The money still to come in, receivables from sold units plus the value of unsold units, must exceed the cost to complete plus the cost of the new funding.
2. A priority charge for the new funder. Existing lenders have to agree to step back, because last-mile money is lent on the basis that it is repaid first.
3. Control of the cash. Escrowed collections, a project monitor, RERA compliance and, if the developer changes, allottee consent.

The main routes are the government-backed SWAMIH fund, private credit funds, a top-up from existing lenders under an RBI resolution plan, a new lender or a co-developer, the RERA authority route and insolvency under the IBC. As of 29 October 2026, SWAMIH Fund I has committed its entire corpus, and SWAMIH Fund-2 has been announced but we could find no application route for it on the fund manager's website.

What do the key terms mean?

Term	Plain meaning
Stalled project	A project where construction has stopped, or is likely to stop, without fresh funds.
Last-mile funding	Money to finish construction only, sized so the project needs no further capital.
Priority debt	Debt repaid before older loans, through a first (senior) charge on the project's assets and cash flows.
Net-worth positive	SWAMIH's test: the value of sold receivables plus unsold inventory is greater than the cost to complete construction and to service the fund's investment.
Cost to complete	The money needed to finish construction and obtain the occupancy certificate (OC).
NOC	No objection certificate. Here, the existing lender's consent to give up its senior charge.
Co-developer	A second developer brought in to fund and build all or part of the project.
CIRP	Corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016 (IBC).
Interim finance	Money raised during a CIRP to keep the business running, as defined in Section 5(15) of the IBC.
DCCO	Date of commencement of commercial operations. For real estate, the expected OC date.

The funding routes compared

Route	Who it fits	Key conditions (as of October 2026)	What to watch
SWAMIH fund	Stalled, RERA-registered affordable and mid-income housing	Net-worth positive; at least 30% built; units up to 200 sq m carpet area priced up to ₹2 crore in MMR, ₹1.5 crore in NCR, Chennai, Kolkata, Pune, Hyderabad, Bengaluru and Ahmedabad, ₹1 crore elsewhere	Fund I is fully committed; Fund-2 (₹15,000 crore proposed) is announced, not yet open for applications that we could find
Private credit fund (last-mile debt)	Projects outside SWAMIH's price caps, or that cannot wait	Underwritten on cost to complete and the sales waterfall; usually a first charge and escrow control	Pricing is set fund by fund and is not standard; compare the total cost
Existing lender top-up	Projects where the current lender will fund the gap	RBI treats a need for additional debt as a credit event; a resolution plan follows	Cost overrun can stay standard only within RBI's limits (see Route 3)
New bank or NBFC (takeover)	Projects with clean title, approvals and a credible sales plan	Fresh appraisal under RBI's project finance rules, including 90% financial closure	The old charge has to be released or the old loan taken over
Co-developer, JD or JV partner	Promoter cannot fund or execute	The partner brings money and execution for a share of revenue or units	Transferring majority rights needs consent of two-thirds of allottees and the RERA authority (Section 15)
RERA authority route	Registration has lapsed or been revoked	The authority may get the remaining works done by a competent authority or the association of allottees (Section 8)	Allottees have the first right of refusal; money still has to be raised
IBC	Developer in default and talks have failed	Allottees are financial creditors; a filing needs 100 allottees or 10% of the project's allottees, whichever is less	Promoter may be barred from bidding (Section 29A); slower and tribunal-driven

For how banks, NBFCs and private credit funds differ in general, see bank vs NBFC vs private credit for developers. This guide covers only the stalled-project case.

Route 1: the SWAMIH fund

The Special Window for Affordable and Mid-Income Housing (SWAMIH) was approved by the Union Cabinet on 6 November 2019 to give priority debt for completing stalled housing. SWAMIH Investment Fund I is a Category II alternative investment fund (AIF) backed by the Government of India, public sector banks and a state-owned insurer, with an aggregate corpus of ₹15,531 crore.

According to the Ministry of Finance (PIB, 8 January 2026), SWAMIH Fund I committed its entire investible corpus before its investment period ended on 5 December 2025, across more than 145 projects in 30 cities, with about 61,000 homes delivered as on 15 December 2025.

Is SWAMIH Fund-2 open?

SWAMIH Fund-2 was announced in the Union Budget 2025-26 on 1 February 2025 as a blended finance facility with contributions from the government, banks and private investors, sized at ₹15,000 crore to complete another 1 lakh units. A PIB backgrounder on 13 March 2026 still called the ₹15,000 crore a proposed corpus. As of 29 October 2026, we found no Fund-2 page or application route on the fund manager's website. Plan for it, but do not build your funding plan around it yet.

Who qualifies, and what surprises developers

Under the fund's published criteria, a project must be stalled or likely to stall without funding, have at least 90% of its available FSI in affordable or mid-income units, be net-worth positive, be at least 30% complete, need last-mile funding sufficient to finish, and be part of a RERA-registered project. The Cabinet-approved FAQs (PIB, 7 November 2019) add that NPA projects and projects in NCLT can be considered, and set a maximum of ₹400 crore for any single project.

Five conditions catch developers out:

• It cannot repay existing lenders. The money is only for completing construction.
• Existing lenders must consent. The fund needs an NOC from them ceding the senior charge.
• It is debt with a priority charge. The fund mainly invests through non-convertible debentures with a priority charge on the project's assets and cash flows.
• Buyer penalties can break the test. If delay interest, compensation and refunds are counted as project cost, a project can turn net-worth negative. The fund usually asks the developer to fund these from its own sources, and in some cases asks buyers to agree to a new possession date and a revised RERA completion date.
• Firms and individuals must incorporate. A partnership or individual developer has to move the project into a new private limited company.

The fund says no intermediary is needed to apply. On 24 October 2025, RBI also listed SWAMIH Fund I as exempt from most of its Investment in AIF Directions, 2025, so banks and other regulated lenders can invest in it outside those limits.

Route 2: private credit and special situations funds

Where a project is above SWAMIH's price caps, outside its segment or cannot wait, the market route is last-mile debt from private credit funds, often structured as SEBI-registered AIFs. They test the same two things SWAMIH does: a credible cost to complete and a sales waterfall that repays them first. Expect a first charge, escrow of collections, an independent project monitor and tight drawdown conditions. The existing lender's consent is just as central here.

Route 3: a top-up from the existing lender, and what RBI allows

Under RBI's Project Finance Directions, 2025, a credit event includes any lender deciding the project needs additional debt, needing to extend the DCCO, or the DCCO expiring. A credit event with any lender during construction triggers a collective resolution under RBI's prudential framework, with a prima facie review within 30 days.

These Directions apply even to many older projects. Projects that reached financial closure before 1 October 2025 stay on the old rules, but any resolution of a fresh credit event after that date follows the new Directions (para 7).

For a non-infrastructure project, including commercial real estate (CRE) and residential housing (CRE-RH), a resolution plan can keep the loan standard if the DCCO moves by up to 2 years. Within that plan, a lender may fund a cost overrun of up to 10% of the original project cost, plus interest during construction, through a standby credit facility sanctioned at financial closure, with D/E and rating no worse. The plan must be implemented within 180 days of the end of the review period, or the account becomes an NPA.

For commercial banks, RBI's Resolution of Stressed Assets Directions, 2025 (updated as on 1 October 2026) let additional finance under an approved resolution plan, including one approved under the IBC, be treated as a standard asset during the monitoring period if the account performs (para 55). Interim finance to a borrower in insolvency may be treated as standard during the insolvency resolution process (para 57).

The DCCO mechanics, and what an extension costs, are in our guide to RERA extension and construction loan DCCO.

Route 4: a new lender, a co-developer or a JD partner

A new lender appraises the project afresh. Under RBI's project finance rules, financial closure covering 90% of project cost and 75% of land must be in place before it disburses. See how much construction finance a developer can get for the sizing rules.

A co-developer or joint development partner brings money and execution. Under Section 15 of the Real Estate (Regulation and Development) Act, 2016, a promoter cannot transfer or assign majority rights and liabilities in a project to a third party without prior written consent of two-thirds of the allottees and the RERA authority. Units held by the promoter are excluded from the count, and each allottee has one vote however many units they hold.

Some states have added their own packages. The Ministry of Housing and Urban Affairs' committee on legacy stalled projects, chaired by Amitabh Kant, reported in July 2023 that the main cause of stress is lack of financial viability. For Noida and Greater Noida, it proposed a zero period waiving interest and penalties for 1 April 2020 to 31 March 2022, letting developers induct co-developers without land authority permission, partial surrender of land, and treating completion finance as priority financing. It advised using the IBC only as a last resort. Uttar Pradesh adopted a package based on these recommendations in December 2023 (Reported). If your project is elsewhere, check your state's own policy.

Route 5: the RERA authority route

Under Section 8 of the RERA Act, when a project's registration lapses or is revoked, the authority may consult the appropriate government and get the remaining works done by a competent authority, by the association of allottees or in any other manner it decides. On revocation, the association of allottees has the first right of refusal. No such order takes effect until the appeal period ends.

The association still has to pay for the work, usually from balance payments due from buyers and sales of unsold units. The same net-worth arithmetic applies.

Route 6: insolvency, now project by project

Homebuyers are financial creditors under the IBC. A filing by allottees must be made jointly by at least 100 allottees or 10% of the allottees of the same project, whichever is less.

On 12 September 2025, in Mansi Brar Fernandes v. Shubha Sharma, the Supreme Court held that real estate insolvency should, as a rule, proceed project by project rather than against the whole company, unless circumstances justify otherwise. It also asked the government to consider a revival fund or a larger SWAMIH fund for bridge financing of stressed projects in insolvency. On 5 May 2026, the Supreme Court restored project-specific resolution plans for a Greater Noida developer group.

Separately, Parliament has amended the Code. The Insolvency and Bankruptcy Code (Amendment) Act, 2026, in force from 26 May 2026, lets a resolution plan include the sale of one or more assets through one or more plans from one or more resolution applicants, on conditions to be specified. For a developer with several projects, that is the legal base for separate plans for separate projects.

Two limits matter. Under Section 29A, a promoter whose company's account has been an NPA for at least a year before the insolvency started cannot submit a resolution plan, unless all overdue amounts with interest and charges are paid first. And the process runs through the tribunal, so timelines are not in the developer's control.

Worked example: is your stalled project fundable?

Illustrative example, assuming a 240-unit mid-income project outside the metros with units under 200 sq m, 160 units sold to 160 different buyers, ₹48 crore still due from those buyers, 80 unsold units worth an assumed ₹75 lakh each, a ₹70 crore cost to complete, ₹12 crore of assumed interest and fees on the new funding, ₹40 crore owed to the existing lender and ₹15 crore of buyer delay compensation claims. These figures are assumptions, not loan terms.

Test	Calculation	Result
Value still to come in	₹48 crore + (80 x ₹75 lakh)	₹108 crore
Money needed	₹70 crore + ₹12 crore	₹82 crore
Net-worth test	₹108 crore against ₹82 crore	Positive by ₹26 crore
If delay compensation counts as cost	₹108 crore against ₹97 crore	Positive by ₹11 crore
Unsold prices 20% lower, compensation counted	₹96 crore against ₹97 crore	Negative by ₹1 crore
Left for the existing lender after completion	₹108 crore minus ₹82 crore	₹26 crore of ₹40 crore owed, or 65%
Consent needed to bring in a co-developer with majority rights	Two-thirds of 160 allottees	At least 107 allottees
Allottees needed to file under the IBC	100, or 10% of 160, whichever is less	16

What a funder sees: the project passes the net-worth test, but the margin shrinks to ₹11 crore once buyer compensation is counted, and a 20% price cut on unsold units tips it negative. That is why funders ask developers to carry compensation outside the project, or buyers to agree a new date.

The existing lender gets ₹26 crore of its ₹40 crore only if the project is completed. Its real choice is between that and whatever it can recover from a half-built project. That comparison is what gets an NOC signed.

A checklist before you approach a funder

1. Get an independent cost to complete, with quantities and a schedule, certified by an engineer or architect.
2. List every sold unit, the amount still due, and any cancellation, refund or dispute.
3. Price unsold units on recent local sales, not on launch prices.
4. Map every lender's dues and charge, and ask early whether each will give an NOC to cede the senior charge.
5. Quantify buyer liabilities: delay interest, compensation orders and RERA complaints.
6. Check RERA status: registration validity, extensions, quarterly filings and the 70% separate account.
7. Clear or schedule land authority dues, and check whether a state package applies.
8. Name who will build, with a project management consultant and a revised completion date you can meet.

Once the project is near OC, the remaining unsold units can often be refinanced through inventory funding. See inventory funding vs construction finance.

How MoneyKarma helps

MoneyKarma is a loan distribution platform for Indian businesses and real estate developers, with 90+ lenders. Not a lender. Our lending partners include public sector banks, private banks, NBFCs and financial institutions. For a stalled project, we help you build the cost-to-complete and net-worth file that funders ask for, approach the lending partners you choose for construction, last-mile or inventory funding, and coordinate the consents needed from existing lenders. SWAMIH applications go directly to the fund manager and need no intermediary. Our team responds within 24 hours on average. Every credit decision is made by the lender or fund. See construction finance, inventory funding and project finance, or share your requirement.

This guide is general information, not financial, legal or tax advice. Rules change. Confirm the terms with your lenders, the RERA authority and your legal advisers.