The detailed norms for financing low-cost housing projects with external commercial borrowings (ECBs) are likely to be announced on Thursday. In August, the government had allowed designated housing finance companies and the National Housing Bank (NHB) to access overseas loans for the specific purpose of financing low-cost housing.
There were some differences between the RBI and the department of economic affairs (DEA) on what constitutes low-cost housing, including whether it should be on the basis of area or the price of the project. However, they have been sorted out and there is an in-principle agreement now, the sources said, adding that an understanding has been reached on this between the departments of economic affairs and financial services, the RBI and NHB.
ECB would be permitted in housing projects where 60% of the total area is devoted to low-cost houses with having a carpet area of 60 sq metres, they said.
Such a project should have the approval of a competent authority under the ?scheme of affordable housing in partnership? of the housing and urban poverty alleviation ministry.
The norms may also specify that the ECB meant for a particular low-cost housing project will have to be kept in an escrow account to ensure that it is used only for low-cost houses in that particular project, they added.
Giving a boost to the housing sector is expected to lead to more employment and a positive impact on the economy as a whole.
Real estate developers had already complained to the government about the difficulties they face in completing several housing projects due to the high cost of credit and the delay in getting clearances including those on the environment impact assessment.