External Commercial Borrowing: Norms For Low Cost Housing Projects Eased by RBI..!


Cost of individual houses should not exceed Rs.30 lakh, and the loan should not exceed Rs.25 lakh; and units financed should have a maximum carpet area of 60 square metres.

The Reserve Bank of India (RBI), on recntly, relaxed the external commercial borrowing (ECB) norms for affordable housing projects by withdrawing the minimum capital requirement, and lowering total experience to three years, while extending the scheme till next financial year (2014-15.)

“Developers or / builders should have a minimum of 3 years’ experience in undertaking residential projects as against five years prescribed earlier,” an RBI notification said.


The RBI also withdrew the condition of minimum paid-up capital requirement of not less than Rs.50 crore for housing finance companies (HFCs) to avail themselves of ECBs. However, the RBI said the condition of the minimum net owned funds of Rs.300 crore (for the HFCs) for the last 3 financial years was unchanged.

“The aggregate limit for ECB under the low cost affordable housing scheme is extended for 2013-14 & 2014-15 with a ceiling of $100 Crore in each of the 2 years, subject to review thereafter,” it said.

It added that the ECB availed of by developers & builders shall be swapped into rupee for the entire maturity on a fully-hedged basis.

The RBI said that the interest rate spread charged by the National Housing Bank (NHB) may be decided by the NHB, taking into account cost and other relevant factors.


The RBI further said that the HFCs while making applications for ECB should submit a certificate from NHB stating that availment of ECB for financing prospective owners of individual unit is for low cost affordable housing.


HFCs should ensure that the cost of such individual units should not exceed Rs.30 lakh, and the loan should not exceed Rs.25 lakh; and units financed should have a maximum carpet area of 60 square metres, the RBI added.
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