In order to encourage builders to come forward for slum rehabilitation project, their by providing better leaving opportunities to the hutment residence, India’s central bank, the RBI, has made the rules easier for developers to go for foreign loan in order to speed up the low cost development projects, such as the slum rehabilitation.
From this year the limit has been increases $1 billion (nearly Rs. 6,000 crore) that can be borrowed foreign source under external commercial borrowing (ECB) scheme to the 2014-2015 financial year.
It will also allow companies to hedge the entire borrowing, protect them from any sharp depreciation of the rupee against the dollar. The Indian rupee slumped to an all-time low of 59.9850 to the dollar last week and foreign investors have been selling Indian debt, with many of them incurring losses due to their unhedged currency exposure.
The RBI said in a notification, “The ECB availed of by developers and builders shall be swapped into rupees for the entire maturity on a fully hedged basis.”
The central bank also reduced the minimum experience companies have to have to undertake these projects to 3 years from 5 years.
The Reserve Bank also scrapped the minimum paid-up capital of Rs.5000 lakhs for property developers.
Source – Reuters