A high-level committee comprising officials from the Reserve Bank of India and finance ministry will meet on 14 May to consider relaxation in External Commercial Borrowing (ECB) limits for the infrastructure sector, CNBC-TV18 reported today.
Media reports had earlier stated that affordable housing is set to get a huge boost with the RBI likely to double the overall ECB limit for the sector to $2 billion and relax several conditions, including those on minimum paid-up capital and net-owned funds, to help more housing finance companies (HFC) to avail of cheap funds from overseas.
However, sources in the finance ministry told CNBC-TV18 that an increase in the ECB cap is unlikely since the government had raised it to $1 billion in December 2012. It was specified that the $1-billion cap includes ECBs to be raised by developers/ builders, NHB and specified housing finance companies. However, it is considering widening the infrastructure definition which implies that affordable housing could soon get an infrastructure status.
An industry statuswill improve the access to funding and help create more affordable housing stock in the country since it ensures that the sector becomes entitled to various government incentives, subsidies and tax benefits. It also opens the sector up for institutional funding. All this will translate into more supply of affordable housing, which will help keep the property rates in check.
The incentives will also fuel the enthusiasm of the developers to take up more affordable housing projects.
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Updated Date: Dec 21, 2014 05:01:34 IST