Ozg Corporate Funding Consultant
Ozg Center, New Delhi & Mumbai
Website: http://fundraising.ozg.in
To book an appointment with Ozg Fundraising Consultants, please go to: ozgcenter.com/appointment
Phone # +91 (0) 88-007-25647
To book an appointment with Ozg Fundraising Consultants, please go to: ozgcenter.com/appointment
Email: funding.consultant@ozg.co.in
RBI/2012-13/339
A.P. (DIR Series) Circular No.
61
December 17, 2012
To,
All Category - I Authorised
Dealer Banks
Madam / Sir,
External Commercial Borrowings
(ECB) for the low cost affordable housing projects
Attention of Authorized Dealer
Category - I (AD Category - I) banks is invited to A.P. (DIR Series) Circular
No. 5 dated August 01, 2005 relating to ECB policy.
2. 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 has
since amended the Regulations and notified vide Notification No.FEMA.246/2012
dated November 27, 2012.
9. AD Category-I banks may
bring the contents of this circular to the notice of their constituents and
customers concerned.
10. The directions contained
in this circular have been issued under sections 10(4) and 11(1) of the Foreign
Exchange Management Act, 1999 (42 of 1999) and are without prejudice to
permissions / approvals, if any, required under any other law.
Yours faithfully,
(Rashmi Fauzdar)
Chief General
Manager
Ozg Corporate Funding Consultant
Ozg Center, New Delhi & Mumbai
Website: http://fundraising.ozg.in
To book an appointment with Ozg Fundraising Consultants, please go to: ozgcenter.com/appointment
Phone # +91 (0) 88-007-25647
To book an appointment with Ozg Fundraising Consultants, please go to: ozgcenter.com/appointment
Email: funding.consultant@ozg.co.in
