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The Government has extended the time limit for raising funds from abroad under the external commercial borrowings (ECB) window for companies operating in some key infrastructure areas, even as the overall cap on ECBs has been kept unchanged at $40 billion.
Projects meant to provide affordable housing, as well as aviation companies and oil marketing firms have all been allowed to access relatively cheaper overseas funds for a longer period. While affordable housing companies can raise ECB till March 31, 2015, the time limit for such borrowings by aviation and oil marketing firms has been extended by a “few months,” officials said.
These decisions were taken at a high-level committee on external commercial borrowings on Tuesday. The meeting was chaired by the Economic Affairs Secretary Arvind Mayaram and attended by the Deputy Governor of the Reserve Bank of India H.R. Khan, besides other senior officials.
It was decided to keep the overall ECB limit, for all types of overseas commercial debt, including bank loans, buyer’s or supplier’s credit, securitised instruments, bonds, etc., at $40 billion for the current fiscal.
“ECB sub-limit for affordable housing has been extended for two more years,” Khan told reporters. The sub-limit is $1 billion. According to the RBI’s circular issued on December 17, 2012, ECB can be used by developers or builders for low-cost affordable housing projects. Housing finance companies and National Housing Bank (NHB) can also use ECB for financing prospective owners of low-cost affordable housing units.
Here, a low-cost affordable housing project for the purpose of ECB would be a project in which at least 60 per cent of the permissible Floor Area Ratio (FAR) or Floor Space Index (FSI) would be for units having maximum carpet area up to 60 sq. meters. Slum rehabilitation projects will also be eligible under the low-cost affordable housing scheme.
Aviation Companies
Khan also informed that ECB sub-limit for aviation companies of $1 billion has been extended for a few more months. However, he did not specify the period. It has also been decided to allow oil marketing companies to use a portion of short-term foreign currency credit as ECB.
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