The government is likely to set stiff riders for developers who wish to raise external commercial borrowings (ECBs) for affordable housing. We do not want a situation where the land mafia is trying to raise such funds from abroad. Only genuine developers,who are building affordable housing projects should be able to avail such loans, a finance ministry official said. The finance ministry and the ministry of housing and urban poverty alleviation in consultation with the Reserve Bank of India are finalising the guidelines that are likely to be issued early next month. Under the norms,ECB may have to be routed through the National Housing Bank (NHB),which could act as a centralised mechanism to help small developers avail the facility. The government would also allow builders to raise such debt only for projects where 75 to 90 per cent of units are reserved for low-cost housing units such as MIG (middle-income group,LIG (low-income group) or EWS (economically weaker section) housing. We are working out the percentage that should be reserved for the MIG or LIG or EWS housing in the project so as to serve the twin purpose of creating affordable housing and making the facility attractive for developers, said Arun Kumar Misra,secretary,ministry of housing and poverty alleviation. The NHB is scheduled to hold a meeting on Monday with all housing finance institutions and developers to ascertain their views. Additionally,the government is also working on a definition of low-cost housing,in order to bring greater clarity for builders. The move follows a Budget 2012-13 announcement by Finance Minister Pranab Mukherjee to allow raising such overseas debt for low-cost affordable housing projects in order to meet the shortage of housing for low income groups in major cities and towns. At present,real estate developers are not allowed finance through the ECB route. Earlier this month,the finance ministry also issued guidelines for raising ECBs in civil aviation,power and roads.
