ECB Norms Eased for Low-Cost Affordable Housing Projects
No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2012-13/539 · issued 24 Jun 2013 · ~2 min read
Quick answerRBI eased ECB norms for affordable housing: developer experience cut to 3 years, HFC minimum paid-up capital condition withdrawn, and USD 1 billion annual limit extended for FY14-15. All ECB must be fully hedged into rupees.
The rule, in the simplest words
Developers need only 3 years of experience building homes (down from 5 years) to borrow money from abroad.
Housing Finance Companies (HFCs) no longer need to have INR 50 crore paid-up capital, but still must have INR 300 crore Net Owned Funds (money they own) for the last 3 years.
The total amount of foreign loans allowed for affordable housing is USD 1 billion each year for 2013-14 and 2014-15.
All foreign loans must be swapped into rupees (Indian currency) for the entire loan period, with full protection against exchange rate changes.
Each home unit must cost ≤ INR 30 lakh, the loan to the buyer must be ≤ INR 25 lakh, and the carpet area (usable floor space) must be ≤ 60 square metres.
How it plays out — a real example
A forex & trade-finance officer in Indore reviews an ECB application from a developer who has built residential projects for 3 years. The officer checks the developer's experience meets the new 3-year rule, confirms the HFC borrower has INR 300 crore Net Owned Funds for the past 3 years, and ensures the loan will be fully hedged into rupees. She then verifies that each unit costs under INR 30 lakh and the loan to the buyer is under INR 25 lakh, approving the application with a smile.
What changed
The minimum experience requirement for developers/builders was reduced from five years to three years. The condition of minimum paid-up capital of INR 50 crore for Housing Finance Companies (HFCs) was withdrawn, while the Net Owned Funds (NoF) requirement of INR 300 crore for the past three years remains. The aggregate ECB limit of USD 1 billion per year was extended for financial years 2013-14 and 2014-15.
What it means for you
Banks and lenders can now facilitate ECB for more developers with shorter track records, expanding the pool of eligible borrowers for affordable housing. The removal of the paid-up capital hurdle for HFCs reduces compliance burden, but the strict end-use conditions (unit cost ≤ INR 30 lakh, loan ≤ INR 25 lakh, carpet area ≤ 60 sqm) remain. The mandatory full hedging of ECB into rupees adds cost but ensures exchange rate risk is covered.
Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.
What banks were required to do at the time
Update internal ECB eligibility checklists to reflect the reduced 3-year developer experience requirement.
Verify that HFC borrowers meet the unchanged Net Owned Funds (NoF) of INR 300 crore for the past three years.
Ensure all ECB availed under this scheme is swapped into rupees on a fully hedged basis for the entire maturity.
Confirm that end-use conditions (unit cost ≤ INR 30 lakh, loan ≤ INR 25 lakh, carpet area ≤ 60 sqm) are met before approving applications.
Who it affects
Authorised Dealer Category-I Banks, Housing Finance Companies (HFCs), Developers and builders of low-cost affordable housing, National Housing Bank (NHB) as nodal agency
❓ Common questions
Regulatory timeline
Decoded by BankPulse2026-06-18 15:15 IST
Status change: withdrawn2026-07-13T04:47:15
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
What is the new experience requirement for developers under this ECB scheme?
Developers now need a minimum of three years of experience in residential projects, reduced from the earlier five years.
Is the minimum paid-up capital condition for HFCs completely removed?
Yes, the condition of minimum paid-up capital of INR 50 crore for HFCs has been withdrawn, but the Net Owned Funds (NoF) requirement of INR 300 crore for the past three years remains.
What are the key end-use restrictions for loans under this scheme?
The cost of each individual unit must not exceed INR 30 lakh, the loan amount per unit must not exceed INR 25 lakh, and the maximum carpet area is 60 square metres.
📜 Read the original circular — full text as issued by RBI
RBI/2012-13/539
A.P. (DIR Series) Circular No. 113
June 24, 2013
To
All Authorised Dealer Category –I Banks
Madam / Sir
External Commercial Borrowings (ECB) for the low cost affordable housing projects
Attention of Authorized Dealer Category - I (AD Category - I) banks is invited to A.P. (DIR Series) Circular No. 61 dated December 17, 2012 on the captioned subject in terms of which ECB for low cost affordable housing projects is allowed as a permissible end-use under the approval route.
2. The policy regarding ECB for the low cost affordable housing projects has been reviewed and it has been decided to modify the guidelines contained in the aforesaid A.P. (DIR Series) Circular as under:
Developers/builders should have a minimum of three (3) year’s experience in undertaking residential projects as against five (5) years prescribed earlier and should have good track record in terms of quality and delivery.
The condition of minimum paid-up capital of not less than INR 50 crore, as per the latest audited balance sheet, for Housing Finance Companies (HFCs) stands withdrawn. However, the condition of the minimum Net Owned Funds (NoF) of Rs. 300 crore for the past three financial years remains unchanged.
The aggregate limit for ECB under the low cost affordable housing scheme is extended for the financial years 2013-14 and 2014-15 with a ceiling of USD 1 billion in each of the two years, subject to review thereafter.
The ECB availed of by developers and builders shall be swapped into Rupees for the entire maturity on fully hedged basis.
3. Issue of fixation of spread for on-lending by National Housing bank (NHB):
Interest rate spread to be charged by National Housing Bank (NHB) may be decided by NHB taking into account cost and other relevant factors. NHB shall ensure that interest rate spread for HFCs for on-lending to prospective owners’ of individual units under the low cost affordable housing scheme is reasonable.
4. Housing Finance Companies (HFCs) while making the applications, shall
submit a certificate from NHB, the nodal agency, that the availment of ECB is for financing prospective owners of individual units for the low cost affordable housing;
ensure that cost of such individual units does not exceed Rs. 30 lakh and loan amount does not exceed Rs. 25 lakh;
ensure that the units financed are having maximum carpet area of 60 square metres; and
ensure that the interest rate spread charged by the HFCs to the ultimate buyer is reasonable.
5. All other aspects of the scheme mentioned in the aforesaid A.P. (DIR Series) Circular would remain unchanged. Authorised Dealers may bring the contents of this Circular to the notice of their constituents and customers.
6. The directions contained in this circular have been issued under Section 10 (4) and Section 11 (1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.
Yours faithfully
(Rudra Narayan Kar)
Chief General Manager in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2012-13/539 · issued 24 Jun 2013. The plain-English explanation above is BankPulse’s own independent summary.
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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=8053&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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