New Delhi, May 21 (PTI) Government today said it aims to slow down flow of foreign debt into the real estate sector through its recent curbs on External Commercial Borrowings (ECBs).
The Finance Ministry on Friday had barred those setting up integrated townships from raising ECBs and made it difficult for small players to raise these borrowings by lowering ceiling on interest rates to be paid on such debts.
"Now the window has been narrowed down. We hope that flow of external debt to real estate sector will slow down," Finance Minister P Chidambaram told reporters here.
He, however, declined to make any comment, when asked whether further curbs on overseas funds are in the offing.
Currently, real estate companies are already barred from mopping up ECBs, but integrated townships do not come under the definition of these companies hitherto for this purpose. Integrated townships are those which are built on at least 100 acres of land.
Sources said the government is apprehensive about excessive external funds raised by smaller players in real estate sector, where prices have almost doubled in past two years. Further, excessive flow of funds also impacts inflation, they said.
In fact, debt raised by the Indian companies through ECB is now estimated to have reached 24 billion dollars during last fiscal, which is substantially higher than the internal cap of 22 billion dollars put up by the government.
According to figures released by Reserve Bank, about 812 companies have raised about 20.24 billion dollars through ECBs during the April 2006-February 2007 period. PTI
The Finance Ministry on Friday had barred those setting up integrated townships from raising ECBs and made it difficult for small players to raise these borrowings by lowering ceiling on interest rates to be paid on such debts.
"Now the window has been narrowed down. We hope that flow of external debt to real estate sector will slow down," Finance Minister P Chidambaram told reporters here.
He, however, declined to make any comment, when asked whether further curbs on overseas funds are in the offing.
Currently, real estate companies are already barred from mopping up ECBs, but integrated townships do not come under the definition of these companies hitherto for this purpose. Integrated townships are those which are built on at least 100 acres of land.
Sources said the government is apprehensive about excessive external funds raised by smaller players in real estate sector, where prices have almost doubled in past two years. Further, excessive flow of funds also impacts inflation, they said.
In fact, debt raised by the Indian companies through ECB is now estimated to have reached 24 billion dollars during last fiscal, which is substantially higher than the internal cap of 22 billion dollars put up by the government.
According to figures released by Reserve Bank, about 812 companies have raised about 20.24 billion dollars through ECBs during the April 2006-February 2007 period. PTI