To contain inflation and manage foreign exchange inflows, the finance ministry today banned the use of external commercial borrowings (ECBs) for a section of the real estate sector.It also made borrowing for such projects less attractive by reducing the upper limits on interest.Although ECBs are not permitted for the real estate sector, such borrowing was allowed for integrated townships of 100 acres or more.
Citing an upgrade to the country’s sovereign credit ratings, the ministry also decided to reduce the all-in-cost ceilings for ECBs.The changes, applicable to ECBs under the automatic as well as approval route, will be effective from the date the RBI notifies the amendments to Foreign Exchange Management Act, 1999.
The implications of this ban are significant for the country’s booming real estate business.
Read more in The Business Standard article.
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