ECB route for low-cost housing extended by two years: H R Khan

Says there had been no overall change in ECB limit which is $40 billion

The Reserve Bank of India (RBI) on Tuesday eased foreign borrowing norms to allow companies access to cheaper funds for key infrastructure sectors.

"RBI has extended the external commercial borrowing (ECB) relaxation for affordable housing which was there for one year to two more years (now) and aviation for a few more months," Deputy Governor H R Khan told reporters. He was speaking after a meeting of the high-level committee on external commercial borrowings (ECB), chaired by Department of Economic Affairs (DEA) Secretary Arvind Mayaram.

Khan, however said there had been no overall change in ECB limit which is $40 billion, adding the central bank would soon come out with a uniform definition for infrastructure companies. Earlier, in December last year, RBI had allowed real estate developers and housing finance companies to raise up to $1 billion through ECBs in the last financial year to promote low-cost housing projects.
 

The funds raised through ECBs could be used either for developing low-cost housing projects or for providing loans up to Rs 25 lakh to individuals for buying units with a price tag of Rs 30 lakh or less, RBI had said in a circular.

Besides developers, the central bank had said housing finance companies (HFCs)/National Housing Bank (NHB) can also raise ECBs for financing prospective owners of low cost, affordable housing units.

The apex bank had also allowed civil aviation sector to raise working capital resources through ECB route. ECBs are considered attractive as cost of raising the loan overseas is lower than that of domestic borrowings. Besides, these provide an additional avenue to access large amounts of funds from global financial markets.