The Reserve Bank of India (RBI) has relaxed the norms for external commercial borrowing (ECB) for low-cost affordable housing projects under the approval route.
As per the guidelines, developers and builders with at least three years of experience in undertaking residential projects, against five years prescribed earlier, and with a good track record in terms of quality and delivery can raise funds for on-lending for low-cost housing units.
Low-cost houses are individual units that do not exceed Rs 30 lakh in value, having maximum carpet area of 60 square metres; the loan amount for each of these units does not exceed Rs 25 lakh.
The aggregate limit for ECB under the low-cost affordable housing scheme is extended for financial years FY14 and FY15 with a ceiling of $1 billion in each year.
However, the players who have been maintaining minimum net owned funds (NOF) of Rs 300 crore for the past three financial years can only use this window. The condition of minimum paid-up capital of not less than Rs 50 crore has been withdrawn.
The ECB availed of by developers and builders shall be swapped into rupees for the entire maturity on a fully hedged basis.
The interest rate spread to be charged by National Housing Bank (NHB) may be decided by NHB taking into account cost and other relevant factors. NHB shall, however, would ensure that the interest rate spread for housing finance companies for on-lending to prospective owners’ of individual units under the low-cost affordable housing scheme is reasonable.
(Edited by Joby Puthuparampil Johnson) Leave Your Comment