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ECB for low cost affordable housing projects

ECB for low cost affordable housing projects

In light of the Union Budget announcement for allowing External Commercial Borrowings (ECBs) for low-cost affordable housing projects as a permissible end use, under the approval route, the RBI has issued notification A.P. (DIR Series) Circular No. 61 dated December 17, 2012, which has been placed on its website (

As per the extant circular, para (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”. Accordingly the format for application to be made to NHB/RBI is placed on the bank’s website (

Further as per the extant circular, para II (b)
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.

The HFCs who are eligible for availing ECB as stated above may apply to NHB for consideration and forwarding of their application to RBI.

RBI Circular – ECB Circular Dated: 24.06.2013



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