The Reserve Bank of India (RBI) on Monday allowed developers/builders to raise funds through external commercial borrowings (ECBs) for low-cost affordable housing projects with immediate effect.
“ECB can be availed of by developers/builders for low-cost affordable housing projects. Housing finance companies (HFCs)/National Housing Bank (NHB) can also avail themselves of ECB for financing prospective owners of low-cost affordable housing units,” the RBI said in a notification.
A low-cost affordable housing scheme for availing ECB would be a project in which at least 60 per cent of the permissible FSI (floor space index) would be for units having a maximum carpet area up to 60 square meters, the RBI said.
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For 2012-13, an aggregate limit of $1 billion is fixed for ECB under the low-cost affordable housing scheme.
Slum rehabilitation projects will also come under the low-cost affordable housing scheme. The eligibility of these projects for raising ECB will be based on the parameters to be set by the Central Sanctioning and Monitoring Committee of the Affordable Housing in Partnership Scheme (AHP) constituted under the chairmanship of Secretary, Housing & Urban Poverty Alleviation (HUPA), which administers the slum rehabilitation projects.
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The RBI said that the proceeds from ECB should be utilised only for low-cost affordable housing projects and not for acquisition of land.
Builders/developers meeting the eligibility criteria can apply to the National Housing Bank (NHB), which will act as the nodal agency for deciding a project’s eligibility as a low-cost affordable housing project.
HFCs not permitted
However, developers/builders/HFCs/ NHB will not be permitted to raise foreign currency convertible bonds (FCCBs) under this scheme.
Eligible borrowers include developers / builders with a minimum five years’ experience in undertaking residential projects and should not have defaulted in any of their financial commitments to banks/ financial institutions or any other agencies. They also should have all necessary clearances from various bodies, including Revenue Department with respect to land usage/environment clearance.
Eligibility
The apex bank said HFCs with a minimum paid-up capital, as per the latest audited balance sheet, of not less than Rs.50 crore and minimum net owned funds (NOF) for the past three financial years of not less than Rs.300 crore would be allowed to tap the ECB route.
Further, the RBI stipulated that borrowing through ECB should be within the HFC’s overall borrowing limit of 16 times their NOF.
The maximum loan amount sanctioned to the individual buyer will be capped at Rs.25 lakh, subject to the condition that the cost of the individual housing unit should not exceed Rs.30 lakh.