A recent press report said that National Housing Bank (NHB) has planned to be the housing sector’s window for external commercial borrowings (ECBs). It desires to pass on benefits of ECBs, including low cost, to the housing-finance sector without transferring any risks.
Mr. R.V. Verma, Chairman and Managing Director, NHB, told the press that NHB will soon approach the Finance Ministry and the Reserve Bank of India (RBI) to allow it to raise ECB. HE said that NHB should have an option to raise money in the external market since there are certain benefits in the international markets.
Reports said that ECBs are currently not permitted for the housing sector and to the NHB. The NHB is allowed foreign-currency borrowing from multilateral bodies after obtaining approvals of the Government and the RBI.
Mr. Verma said that NHB should be allowed to tap the international market and transfer the benefits to the domestic housing-finance system. He added saying that the risks will be hedged at their level and rupee funds will be passed on to the housing-finance companies (HFCs).
External Commercial Borrowings (ECB) are defined to include commercial bank loans, buyer’s credit, supplier’s credit, securitized instruments such as floating rate notes, fixed rate bonds etc.,