RBI eases overseas borrowing rules in housing, aviation sector

RBI eases overseas borrowing rules in housing, aviation sector New Delhi: The Reserve Bank Tuesday eased overseas borrowing norms to allow companies access to cheaper funds for key infrastructure sectors.

"The RBI has extended the external commercial borrowing (ECB) relaxation for affordable housing which was there for one year to two more years (now) and aviation for a few more months," RBI's deputy governor H R Khan told reporters.

He was speaking after a meeting of the high-level committee on external commercial borrowings (ECB), which was chaired by Department of Economic Affairs (DEA) Secretary Arvind Mayaram.

Khan, however said that there has been no overall change in ECB limit which is USD 40 billion, adding the central bank will soon come out with a uniform definition for infrastructure companies.

Earlier, in December last year, the Reserve Bank had allowed real estate developers and housing finance companies to raise up to USD 1 billion through ECBs in the last fiscal to promote low-cost housing projects.

The funds raised through ECBs could be used either for developing low-cost housing projects or for providing loans up to Rs 25 lakh to individuals for buying units with a price tag of Rs 30 lakh or less, the RBI had said in a circular.

Besides developers, the central bank had said housing finance companies (HFCs)/National Housing Bank (NHB) can also raise ECBs for financing prospective owners of low cost, affordable housing units.

The apex bank had also allowed civil aviation sector to raise working capital resources through ECB route.

ECBs are considered attractive as cost of raising the loan overseas is lower than that of domestic borrowings.

Besides, they provide an additional avenue to access large amounts of funds from global financial markets.

PTI