The Reserve Bank of India (RBI) on Monday relaxed external commercial borrowing (ECB) norms for raising foreign currency loans for low-cost affordable housing projects.

The central bank relaxed the minimum experience norm by two years. It means residential project developers with just three years of experience are now eligible to raise loans through the ECB route. Previously, they had to have a minimum five-year experience.

The minimum paid-up capital norm of at least Rs 50 crore for housing finance companies (HFCs) has been withdrawn. However, the term of the minimum net-owned funds of Rs 300 crore for the last three years remains unchanged.

The annual limit for raising foreign currency loans through the ECB route under the low-cost reasonable housing scheme is capped at $1 billion.

R V Verma, chairman of National Housing Bank (NHB), welcoming the easing of the ECB norms for the housing sector, saying opening of ECB was a significant signal to the market. He, however, added that the volatility in the global financial markets must be kept in mind while raising funds through the ECB route.

On Friday, RBI created a new sub-sector in real estate for housing and lowered the risk weights on such loans to make loans cheaper for the developers.