The norms for external commercial borrowings (ECBs) by housing finance companies (HFCs) are expected to get some leeway from the regulator to enable better flow of funds to affordable housing projects.
“The all-in-cost (limit) should be more reasonable so that it can enable borrowers to access ECBs at the rates prevailing in the international market,” said R V Verma, chairman and managing director of National Housing Bank (NHB).
According to current norms, the Reserve Bank of India (RBI) allows ECBs within the spread of 350 basis points (bps) for a three to five-year tenure and 500bps for a more than five-year tenure above the six-month London Interbank offered rate.
The ceiling was enhanced in November last year by the RBI, since companies were finding it difficult to raise funds within the previous limits. “It (limits) should not be artificially too low, so that funds are not available at all at those rates,” said Verma.
