RBI eases infra-bond sales norms; affordable housing to become cheaper


New Delhi: The Reserve Bank of India (RBI) has eased long-term infra-bond sales norms for infrastructure financing. These long-term bonds are typically issued by banks for infra debt.

The move will encourage infrastructure development and affordable housing in the country – a step welcomed by realtors’ body CREDAI. “It is a welcome step. This will lead to lower interest rates for affordable housing projects,” CREDAI chairman Lalit Jain said.

The RBI has said that home loans to individuals up to Rs 50 lakh (for houses of value up to Rs 65 lakh) in metros and loans up to Rs 40 lakh (home value Rs 50 lakh) in other centres will be considered as affordable housing. Extending these loans will entitle banks to float infrastructure bonds up to seven years. As per the new order long term bonds will now be exempted by the RBI from mandatory regulatory norms like CRR and SLR if the money raised is used for funding of such projects.

Another realtors’ body NAREDCO chairman Navin Rajeja said the move will help developers to mobilise cheaper finance for development of affordable housing and will result into cutting in prices of housing in long term.

“It is expected that the home loan rates may also come down because of this move,” Mr Raheja said. Jain of Credai demanded that the housing sector should be given infrastructure status and felt that Pune, Ahmedabad and Lucknow should have figured in the list of metropolitan cities.

The central bank said it intends to “ease the way for banks to raise long term resources to finance their long term loans to infrastructure as well as affordable housing”.

Shares of banks and infrastructure companies rose on Wednesday as a result of the move.

CLSA said the RBI norms will lower regulatory needs to improve asset-efficiency. It will be easy for banks to lower rates without losing spreads.


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