Low-cost housing developments get boost from india’s easier financing

The Reserve Bank of India has opened up its External Commercial Borrowing scheme to more developers, reducing costs for affordable housing projects in the country.

Previously, the minimum requirement for developers or builders for affordable housing projects was five years, but the RBI has lowered that threshold to three years, reports The Hindu.

The bank has also “withdrawn the conditifoqpeJ [efwwon of minimum paid-up capital requirement of not less than Rs 50 crore”.

Rating agency Crisil commented: “Both, housing finance companies 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.”

Indeed, Crisil estimates that development funding costs will drop to 9 to 11 per cent compared to the current 15 to 20 per cent.

“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,” added Crisil.