Govt mulling relaxing ECB norms for low-cost housing
New Delhi: Finance Ministry and Reserve Bank of India (RBI) officials are likely to meet this week to consider relaxing norms for raising funds through the external commercial borrowing (ECB) window for low-cost housing sector.
"We will meet RBI officials this week to consider easing the norms for raising funds through ECB route for low-cost housing sector,"a senior finance ministry official said.
The meeting assumes significance as India's Current Account Deficit (CAD) widened to a record 6.7 percent of GDP in December quarter driven by heavy oil and gold imports and muted exports.
ECB is an instrument to facilitate access to foreign money by Indian corporations and public sector undertakings.
Amid high domestic interest rate regime in the country, India companies are increasingly availing ECB route, raising funds at lower cost from the overseas markets.
Earlier, in December 2012, the RBI 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.
According to the latest data available with RBI, ECBs of USD 2.1 billion were raised by Indian companies in February 2013, against USD 2.6 billion in the corresponding month the previous year.
At present, ECBs can be raised for investment such as import of capital goods, new projects, and modernisation or expansion of existing production units.
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