ECB norms positive for low-cost housing projects: CRISIL

CRISIL Research's impact note is based on the modifications made by the Reserve Bank of India (RBI) on the policy regarding External Commercial Borrowings (ECB) for low-cost affordable housing projects in India. The circular has eased fund-raising norms through the ECB route for the low-cost affordable housing projects. Both, housing finance companies (HFCs) and developers, are the direct beneficiaries while home buyers will also benefit in terms of concessional interest rates and greater availability of low-cost homes.

The easing of fund-raising norms through the ECB route will lead to developers focusing on low-cost housing projects. CRISIL Research’s estimates suggest that the cost of funding for developers will reduce to around 9-11% (taking into account the hedging cost) from the current levels of 15-20% (depending on the current source of funds). In addition to the cost of funds, since the criteria of past experience has been relaxed, relatively less-experienced developers will also benefit as it will enable them to launch new projects in the affordable housing segment. Likewise, home buyers will benefit with a reduction in interest rates. Disclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL's opinions as on the date of this Report.  The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose. CRISIL Limited . All Rights Reserved. Published under permission from CRISIL"

Read More