Indian mortgage lender Housing Development Finance Corp Ltd HDFC is seeking approval from the Reserve Bank of India for a foreign currency loan under newly relaxed rules relating to offshore borrowings, a source familiar with the matter said.
HDFC has applied to the RBI for approval and will approach lenders after the central bank gives its nod, the source said.
In mid-December, the RBI relaxed the rules governing external commercial borrowings (ECB) allowing real estate and property developers as well as housing finance companies and the National Housing Bank to borrow offshore to fund low-cost housing projects.
According to the RBI notification, a low-cost affordable housing project for the purpose of ECB would be a project in which at least 60% of the permissible floor space index (FSI) would be for units having maximum carpet area up to 60 square metres.
Proceeds from offshore borrowings under this window cannot be used for land acquisition.
Should HDFC's deal materialise, it will be its first offshore borrowing in more than three years since it signed a US$75m three-year club loan in December 2009. HDFC attempted a US$200m three-year loan a month later, but called off the plan in March 2010 following RBI changes to the ECB rules at that time.