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 The condition of minimum paid-up capital of INR 50 crore for Housing Finance Companies (HFCs) was withdrawn, while the Net Owned Funds (NoF) requirement of INR 300 crore for the past three years remains.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.
What you must do
- 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
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Yes, the condition of minimum paid-up capital of INR 50 crore for HFCs has been withdrawn, but the Net Owned Funds (NoF) requirement of INR 300 crore for the past three years remains.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.