External Commercial Borrowing Will Be Permitted Only For Low Cost Buildings

by correspondent
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The government is all set to curb the menace of land mafia by enacting new laws for the developers in raising overseas funds.

According to the ministry of housing and urban poverty alleviation, only genuine developers who wish to develop affordable housing in which 75-90% of the units are reserved for low-cost housing units such as MIG (middle-income group, LIG (low-income group) or EWS (economically weaker section) housing can avail the facility of External Commercial Borrowing (ECB).

In 2009, the government had allowed developers to avail ECB loans only for integrated townships. But from now the rules has been changed and the ministry has explained that the move has been made in order to spur the investments in low – cost housing projects as overseas funds could be availed at lower rates.

Based on the announcement made by the finance minister in the 2012-13 budget about the ECB loans, the ministry of housing is working with the department of financial services in the finance ministry to finalise the eligibility norms of projects for ECB. It is also working on defining ‘affordable housing’ and is formulating guidelines on how to optimise the use of land for this segment.

The committee is also planning to offer financial support to the developers by including stamp duty exemption, lower development fees, capital subsidy on the housing stock, income tax rebate or even land concessions. It also suggested a credit facility to the buyers with much higher interest subsidy.

Source: The Economic Times

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