National Housing Bank (NHB) expects Housing finance companies (HFCs) to raise funds through the
external commercial borrowings (ECBs) as Reserve Bank of India (RBI) reviewed ECB norms.
HFCs may avail ECBs to fund their affordable housing projects, NHB, which is the regulator of the sector said.
RV Verma, Chairman of NHB said the regulator received an application from HDFC for ECB and it expects more applications. NHB hopes $1 billion ceiling will be fully utilised.
Some HFCs like HDFC, LIC Housing Finance and Dewan Housing Finance wanted to avail ECBs last year. But, at that time, RBI did not clear any applications as the ECB norms were under review.
Some industry players feel that this is the right time for raising ECB as the rupee has depreciated sharply against the dollar. This is because when the rupee depreciates, borrowers get more money in rupee terms.
HFCs find ECBs attractive even though the overall cost has risen a bit. Even after factoring in hedging cost, it still makes attractive for HFCs, some industry players feel.
NHB wants borrowers to time their borrowings in such a way that they get more effective cost and enter the market at a time when hedging cost is more efficient.
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