In its endeavor to encourage investors to participate in Indian real estate sector, Reserve Bank of India vide circular dated June 24, 2013 eased the norms on the availing of foreign loans for the affordable housing projects may attract more and more developers to enter the sector and exploit the realty sector. The amendments are:
- Developers/builders should have a minimum of three (3) year’s experience in undertaking residential projects as against five (5) years prescribed earlier and should have good track record in terms of quality and delivery.
- The condition of minimum paid-up capital of not less than INR 50 crore, as per the latest audited balance sheet, for Housing Finance Companies (HFCs) stands withdrawn. However, the condition of the minimum Net Owned Funds (NoF) of Rs. 300 crore for the past three financial years remains unchanged.
- The aggregate limit for ECB under the low cost affordable housing scheme is extended for the financial years 2013-14 and 2014-15 with a ceiling of USD 1 billion in each of the two years, subject to review thereafter.
- The ECB availed of by developers and builders shall be swapped into Rupees for the entire maturity on fully hedged basis.
The relaxation in ECB norms for affordable Housing opens a new avenue for raising revenue. It will bring greater access to capital and attract foreign players in the housing sector.