For cash-strapped realty firms, there is good news around the corner. The finance ministry is planning to allow the developers of integrated township to use funds from overseas or external commercial borrowings (ECB) by one more year.
Despite reservations by the Reserve Bank of India, the finance ministry feels enabling integrated township developers to raise ECBs would help enhance infrastructure facilities.
“Since the definition of integrated townships under ECB guidelines is conservative (minimum area of 10 acres) and since it will improve infrastructure, it has been decided to extend the existing dispensation till December 2010,” said a senior official.
The issue, he said, was discussed at length in the last meeting of High Level Committee on ECBs on November 12.
“This is good option for realtors involved in the development of affordable integrated township projects,” said Sanjay
Chandra, managing director, Unitech. “It will help in saving costs which is important for increase of market share of affordable housing projects.”
“During the last 15 months, liquidity was a concern with international lenders,” said Pradeep Jain, chairman, Parsvnath Developers that is building 13 such townships. “With economic recovery things are looking good and it would be good if the government extends the deadline.”
Under the existing policy, utilisation of ECB proceeds for real estate is not permitted. It was however allowed as a sector-specific measure for the development of integrated townships in January 2009, and extended till December 2009.
“We have not seen many developers utilising the ECB window for funding integrated township projects,” said Anuj Puri, chairman, Jones Lang LaSalle Meghraj. “For the few who have, it has been largely for their hospitality business.”