Housing Development Finance Corporation (HDFC) said that it has raised $300 million through external commercial borrowings (ECB) under the affordable housing scheme of the Reserve Bank of India.
ECB loans are raised by Indian companies abroad and carry a lower rate of interest. The idea behind the RBI allowing housing finance companies to tap external sources of financing was to enable them to lend to borrowers at cheaper rates for affordable housing projects.
The borrowing facility has a tenor of 5 years. The rate of interest on the facility is linked to USD Libor (London Interbank Offered rate) plus 1.75 per cent.
The RBI in December 2012, permitted to HFCs/ NHB to raise ECBs for financing prospective owners of low cost affordable housing units.
Low Cost Affordable Housing units are units where the property cost does not exceed Rs 30 lakhs, loan amount is capped at Rs 25 lakhs and the carpet area does not exceed 60 square metres (646 sq.ft).
The RBI has prescribed an aggregate limit of $1 billion each for FY 14 and FY 15 for ECBs to be drawn under this window.
HDFC raised the loan from a consortium of four lenders, State Bank of India, Sumitomo Mitsui Banking Corporation, The Bank of Tokyo-Mitsubishi UFJ and DBS Bank.