RBI allows housing finance cos to raise funds from overseas

MUMBAI: The Reserve Bank on Monday allowed the cash-starved housing finance companies to raise short-term foreign currency-denominated funds from overseas markets.

Housing finance companies could raise these resources up to $10 million or 50 per cent of their net owned fund, whichever is higher, for refinancing the short-term liability, RBI said in a release.

As such, these companies cannot use these funds for creating fresh assets, the central bank said.

These funds should have a maximum maturity of three years and must be swapped into rupee for the entire maturity, the release said.

Housing finance companies can raise these funds from only those lenders, which are multilateral or bilateral financial institutions and foreign equity holders with minimum direct equity holdings of 25 per cent, it added.

Besides, these funds can be raised at interest rates not more than 200 points above London Interbank Offered Rate (LIBOR), RBI said.

Apart from taking a slew of liquidity-easing measures in general, RBI had recently reduced provisioning requirements for the housing sector.

The housing market in India is facing a downturn due to general slowdown, with many real estate sector shares taking a beating in the stock market.