Government relaxes ECB guidelines and shells out Rs 10,000 crore to boost affordable housing

The Narendra Modi government on Saturday announced a Rs 10,000 crore special window to provide last-mile funding for the completion of ongoing housing projects which are not non-performing assets (NPAs) or facing bankruptcy proceedings under National Company Law Tribunal (NCLT).

Announcing the measure, finance minister Nirmala Sitharaman said the government will contribute Rs 10,000 crore for the special window and roughly the same amount is expected from outside investors.

This window will help in the completion of affordable and middle-income housing projects. The fund will be managed by professionals, the minister added.

Sitharaman also said the interest rate on housing building advance will be lowered and linked to the 10-year G-sec yields.

"Government servants contribute to a major component of demand for houses. This will encourage more government servants to buy new houses," she said.

External commercial borrowing (ECB) guidelines will also be relaxed to help housing developers obtain overseas funds.

ECB guidelines will be relaxed to facilitate the financing of homebuyers who are eligible under Pradhan Mantri Awas Yojna, in consultation with the central bank.