LIC Housing Finance Company is awaiting the Reserve Bank of India’s nod to raise $300 million from overseas markets for lending to customers wanting to buy affordable houses.

Sunita Sharma, Managing Director and CEO, LIC Housing Finance, said: “We applied to the RBI about two months back.”

The housing finance arm of the state-run insurance major, Life Insurance Corporation of India, said it will raise the money through external commercial borrowing (ECB).

Money borrowed from overseas is usually cheaper as the interest rates in countries such as the US are much lower than interest rates in India.

The proceeds from the borrowing will be used by the company to lend to buyers under the affordable housing segment. This means that the buyers of affordable houses will get loans at a cheaper rate.

If the company gets RBI nod, it will have to ensure that the money raised through the ECB is given to individuals buying houses where the cost of each unit is Rs 30 lakh or less. The loan amount in such cases cannot exceed Rs 25 lakh, according to the

RBI norms Further, the RBI defines affordable houses as having a maximum carpet area of 645 square feet (60 square metres).

In June, the RBI said that housing finance companies (HFCs) together can borrow a maximum of $1 billion every year under the scheme till FY 2014-15.

Only those HFCs that have had net-owned funds of Rs 300 crore for the past three years are eligible to borrow under this scheme.

In Budget 2012-13, the Government had announced that HFCs and builders/developers will be allowed to raise money under the ECB scheme. Certain slum-rehabilitation projects are also eligible to get funds under the scheme.

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