Apr 23 2007
The RBI allows ECB in real estate projects involving integrated townships of 100 acres or more
At present, the government allows FDI in real estate India, but does not permit foreign institutional investment. It is, however, considering a proposal not to view FDI and FII as distinct investment flows while specifying an overall limit.
It is yet to permit foreign venture capital investors (FVCI) in the realty sector. To ensure that the concept of special economic zones (SEZs) did not distort the realty market, the RBI has classified lending to SEZs on par with commercial real estate, according it higher risk weight and provisioning.
The RBI allows ECB in real estate India projects involving integrated townships of 100 acres or more. In real estate India projects, a large portion of money is required for land acquisition, which is classified as working capital. But end-use restrictions like not allowing ECB money to be used for working capital take away its attractiveness.
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