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The National Housing Bank (NHB) has received applications from about half-a-dozen housing finance companies for raising $1.06 billion through External Commercial Borrowings to support low-cost housing projects.
Some of the applicants include LIC Housing Finance, PNB Housing and Dewan Housing Finance.
However, developers’ response has been lukewarm, with only two developers approaching the NHB so far.
NHB is the nodal agency for deciding on the entities eligible for tapping ECBs for low cost affordable housing.
The Minister of Housing and Poverty Alleviation Ajay Maken said that once the existing cap of $1 billion is exhausted in 2012-13, the limit would be revised upwards to give further boost to affordable housing.
As per current RBI guidelines, developers and housing finance companies (HFCs) can raise up to $1 billion through the ECB route and this can be used either for developing low-cost housing projects or providing loans up to Rs 25 lakh to individuals for buying units priced Rs 30 lakh or less.
Besides developers, the central bank said the NHB too can also raise ECBs for financing prospective owners of low-cost, affordable housing units. Slum rehabilitation projects would also be eligible for raising ECBs to fund affordable housing projects.
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 FSI (floor space index) would be for units having maximum carpet area up to 60 square meters.
ECBs are considered attractive as the cost of raising the loan overseas is lower than that of domestic borrowings. Moreover, they provide an additional avenue to access large amounts of funds from global financial markets.
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