(a) whether the Government has relaxed/proposes to relax the external commercial borrowing
norms for affordable housing projects;
(b) if so, the details thereof; and
(c) the likely effects of the said move on the real estate sector in the country?
(a) whether the Government has relaxed/proposes to relax the external commercial borrowing
norms for affordable housing projects;
(b) if so, the details thereof; and
(c) the likely effects of the said move on the real estate sector in the country?
MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI NAMO NARAIN MEENA)
(a) & (b): In the Union Budget 2012-13, an External Commercial Borrowing (ECB) provision was
made for low cost affordable housing projects as a permissible end-use. The said Budget
announcement was implemented by RBI vide its A.P. (DIR Series) Circular No. 61 dated December
17, 2012. Under this scheme, ECB can be availed under approval route by developers / builders
and National Housing Bank (NHB) for low cost affordable housing projects. The ECB proceeds
shall, however, not be used for acquisition of land. Housing Finance Companies (HFCs) and
NHB can also avail themselves of ECB for financing prospective owners of low cost affordable
housing units.
The policy regarding ECB for the low cost affordable housing projects has been recently reviewed
in consultation with RBI and has been rationalized as under:
i. Developers/builders should have a minimum of three (3) yearsâ experience in undertaking
residential projects as against five
(5) years prescribed earlier and should have good track record in terms of quality and delivery.
ii. The condition of minimum paid-up capital of not less than INR 50 crore, as per the latest
audited balance sheet, for Housing Finance Companies (HFCs) has been relaxed. However, the
condition of the minimum Net Owned Funds (NoF) of Rs. 300 crore for the past three financial
years remains unchanged.
iii. The aggregate limit for ECB under the low cost affordable housing scheme is extended for
the financial years 2013-14 and 2014-15 with a ceiling of USD 1 billion in each of the two
years, subject to review thereafter.
Iv. The ECB availed of by developers and builders shall be swapped into Rupees for the
entire maturity on fully hedged basis.
(c): It is expected that ECB scheme for low cost affordable housing will supplement funds
available to low cost/ affordable housing project developers from domestic banks/financial
institutions. This will also reduce the cost of capital and resultantly reduce the cost of construction and housing in the country.