EXTERNAL COMMERCIAL BORROWINGS (ECB) FOR THE LOW COST
AFFORDABLE HOUSING PROJECTS IS NOW UNDER PERMISSIBLE END-USE UNDER APPROVAL ROUTE
On a review of the policy related to ECB and keeping in
view the announcement made in the Union Budget for the Year 2012-13, it has
been decided to allow ECB for low cost affordable housing projects as a permissible
end-use,under the approval route. ECB can be availed of by developers/builders
for low cost affordable housing projects. Housing Finance Companies (HFCs)/National
Housing Bank (NHB) can also avail of ECB for financing prospective owners of
low cost affordable housing units.
3. Detailed guidelines on ECB for low cost affordable
housing scheme are set out below:-
(I) Definition of eligible project
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
would be for units having maximum carpet area up to 60 square meters .
Slum rehabilitation projects will also be eligible under
the low cost affordable housing scheme. The eligibility of slum rehabilitation
project for ECB will be based on the parameters to be set by the Central
Sanctioning and Monitoring Committee of the Affordable Housing in Partnership
Scheme (AHP) constituted under the Chairmanship of Secretary, Housing &
Urban Poverty Alleviation (HUPA) which administers the slum rehabilitation
projects.
(II) Eligible Borrowers :-
(a) Developers/builders:-
Developers/builders with proven financial track record
based on the following criteria shall qualify for availing ECB for low cost
affordable housing projects:
i) Developers/builders undertaking low cost affordable
housing projects should be a company registered under the Companies Act, 1956;
ii) Such developers/builders should have minimum 5 years’
experience in undertaking residential projects, and should have good track
record in terms of quality and delivery;
iii) The developers/builders should not have defaulted in
any of their financial commitments to banks/ financial institutions or any
other agencies;
iv) The project should not be a matter of litigation;
v) The project should be in conformity with the
provisions of master plan/ development plan of the area. The layout should
conform to the land use stipulated by the town and country planning department
for housing projects; and
vi) All necessary clearances from various bodies
including Revenue Department with respect to land usage/environment clearance,
etc., are available on record.
(b) Housing Finance Companies (HFCs):-
HFCs, satisfying the following conditions, can avail of
ECB for financing prospective owners of low cost affordable housing units: -
i) The HFC should be registered with the National Housing
Bank (NHB) and operating in accordance with the regulatory directions and
guidelines issued by NHB;
ii) The minimum paid-up capital, as per the latest
audited balance sheet, shall not be less than INR 50 crore;
iii) The minimum Net Owned Funds (NOF) for the past three
financial years shall not be less than INR 300 crore;
iv) Borrowing through the ECB should be within the HFC's
overall borrowing limit of 16 times their Net Owned Funds (NOF);
v) The net non-performing assets (NNPA) shall not exceed 2.5
% of the net advances;
vi) The maximum loan amount sanctioned to the individual
buyer will be capped at INR 25 lakh subject to the condition that the cost of
the individual housing unit shall not exceed INR 30 lakh; and
vii) The ECB shall be swapped into Rupees for the entire
maturity on fully hedged basis.
Besides HFCs meeting norms set at para above, NHB shall
be eligible for raising of ECB for financing low cost affordable housing units
of individual borrowers. Further, in the event a developer of low cost
affordable housing project not being able to raise ECB directly as envisaged
above, National Housing Bank shall be permitted to avail of ECB for on-lending
to such developers who satisfy the conditions stated in para3 (II) (a) above
subject to the interest rate spread set by RBI.
(III) End –use:
ECB proceeds shall be utilized only for low cost
affordable housing projects and shall not be utilized for acquisition of land.
(IV) Nodal agency for deciding project’s eligibility for
low cost affordable housing
Builders/developers meeting the eligibility criteria
shall have to apply to the National Housing Bank (NHB) in the prescribed format.
NHB shall act as the nodal agency for deciding a project’s eligibility as a low
cost affordable housing project, and on being satisfied, forward the
application to the Reserve Bank for consideration under the approval route. Once
NHB decides to forward an application for consideration of RBI, the prospective
borrower (builder/developer) will be advised by the NHB to approach RBI for
availing ECB through his Authorised Dealer in the prescribed format. Guidelines
with respect to the format of application, project monitoring, etc. are being
separately issued by NHB.
4. Developers/builders/HFCs/ NHB will not be permitted to
raise Foreign Currency Convertible Bonds (FCCBs) under this scheme.
5. For the financial year 2012-13, an aggregate limit of
USD 1(one) billion is fixed for ECB under the low cost affordable housing
scheme which includes ECBs to be raised by developers/builders and NHB/specified
HFCs. This limit shall be subject to annual review.
6. All other ECB parameters, such as, recognized lender,
minimum average maturity period, all-in-cost ceilings, restrictions on issuance
of guarantee, choice of security, parking of ECB proceeds, prepayment,
refinancing of ECB, reporting requirements remain unchanged and shall be
complied with.
7. The amended policy will come into force with immediate
effect and the scheme will be reviewed after a period of one year based on the
experience gained in the implementation of the scheme.
8. Reserve Bank of India November 27, 2012 .
Ref- A.P. (DIR Series) Circular No. 61 dated 17 December 2012
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