 "'ECB norms for HFCs likely to be reviewed'")
National Housing Bank (NHB) on Monday said the ministry of finance and the central bank were considering reviewing the eligibility criteria for housing finance companies (HFCs) to raise money through external commercial borrowing (ECB).
“We are expecting modification in some features found to be a little restrictive to allow more players (to tap ECB). This is being considered by the Reserve Bank of India (RBI) and the government,” NHB Chairman R V Verma said. “RBI has already sent its comments to the government.” Verma said RBI and the government were considering relaxing HFC norms for paid-up (share capital) and net-owned funds.
In his Budget 2012-13 speech, then finance minister Pranab Mukherjee had allowed ECB for affordable housing projects in urban areas. Following this, RBI had fixed the ECB limit for 2012-13 at $1 billion. The guidelines stated only HFCs with minimum paid-up capital of Rs 50 crore and net owned funds of Rs 300 crore for at least the last three financial years were eligible to raise funds through ECB.
Based on utilisation, a fresh limit for ECBs would be announced for 2013-14, he said. On the urban housing fund announced in Budget 2013-14, Verma said NHB had already formulated the scheme and sent it to the ministries concerned — of finance and housing & urban poverty alleviation. The scheme, he said, would be operational in 15 days to a month.
“We are expecting modification in some features found to be a little restrictive to allow more players (to tap ECB). This is being considered by the Reserve Bank of India (RBI) and the government,” NHB Chairman R V Verma said. “RBI has already sent its comments to the government.” Verma said RBI and the government were considering relaxing HFC norms for paid-up (share capital) and net-owned funds.
In his Budget 2012-13 speech, then finance minister Pranab Mukherjee had allowed ECB for affordable housing projects in urban areas. Following this, RBI had fixed the ECB limit for 2012-13 at $1 billion. The guidelines stated only HFCs with minimum paid-up capital of Rs 50 crore and net owned funds of Rs 300 crore for at least the last three financial years were eligible to raise funds through ECB.
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A few developers, as well as the top three HFCs, Housing Development Finance Corporation, LIC Housing Finance and Dewan Housing Finance, had approached NHB, the regulator for HFCs as well as nodal agency for the scheme, for ECB. Verma said after the review, these HFCs would be informed of the final approval by RBI. For 2012-13, the $1 billion limit had been fully applied for, he said. Since the financial year had ended yesterday, he was “sure RBI will consider an extension for raising ECB”, he added.
Based on utilisation, a fresh limit for ECBs would be announced for 2013-14, he said. On the urban housing fund announced in Budget 2013-14, Verma said NHB had already formulated the scheme and sent it to the ministries concerned — of finance and housing & urban poverty alleviation. The scheme, he said, would be operational in 15 days to a month.