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RBI Guidelines for FDI and ECB in Indian Real Estate

Question by Mr Prasad: Could you be kind enough to tell me if we can bring FDI in debt form in India in real estate sector under current RBI Guidelines under automatic route and if you can suggest few names to whom we can contact for this for detailed procedures and documentation etc?

Answer: I think when you say FDI in debt form, you meant to say: External Commercial Borrowing (ECB), because FDI (foreign direct investment) stands for investments rather than debt.

The finance ministry allowed External Commercial Borrowing (ECB) in Indian real estate projects (in 2005) involving integrated townships of 25 acres or 50,000 square metres of more. However, the RBI’s position has to be checked on a project by project basis. Its not right to give a general answer on this website – so that other readers don’t take wrong conclusions.

As per our understanding, the RBI allows ECB in real estate projects involving integrated townships of 100 acres or more.

As you maybe aware, in real estate projects, significant capital is required upfront for land acquisition, which is classified as working capital. But end-use restrictions like not allowing ECB money to be used for working capital mean that Foreign funds (as debt) can’t be applied everywhere in Indian Real Estate.

RBI guidelines are often related to type and scale of the project. So if you are planning a large infusion of debt capital then please check RBI guidelines at a micro level.  Our team of legal real-estate experts could offer detailed help on specific cases. Feel free to contact us or ask any other questions.

Comments

Pingback from India-Real-Estate.org » NRI Investment Through ETFs or ADRs in Indian Real Estate
Time: September 22, 2008, 1:39 pm

[...] RBI Guidelines for FDI and ECB in Indian Real Estate [...]

Pingback from India-Real-Estate.org » Indian Real Estate Laws: Indian Transfer of Property Act & Indian Registration Act
Time: September 23, 2008, 12:36 pm

[...] RBI Guidelines for FDI and ECB in Indian Real Estate [...]

Comment from HARISH KUMAR
Time: October 14, 2008, 12:22 pm

ECB once accepted can it be converted into FDI (equity) after one year?

Comment from Saptarshi Pathak
Time: December 30, 2008, 12:21 pm

Hello Sir.
I would like to know that if one foreign company is coming to invest in India (e.g. as a Joint venture), what are the current laws and regulations that the foreign company has to follow.

Comment from Mars Consulting
Time: June 19, 2009, 10:03 am

There are some relaxations by RBI in this regard to improve foreign investment in real estate sector.

Comment from hardik rathod
Time: February 16, 2011, 6:29 am

hello!my name is hardik rathod.i reside in mumbai.i would like to know about my case.the case no. is 1380.its a writ petition filled in 2001.the final hearing is on 16th but on 16th its eid and its a public holiday.its being almost 12years the case is running in the court.its a property case.the building was collapsed in 1998.the builders who had promised to build up a building are still not working and willing to built it.what i m supposed to do?i am not even getting a hint from our lawyer to.please suggest me a help.

Comment from D.K.Sharma
Time: March 21, 2011, 12:51 pm

Hello
I have booked my flate with reputed builder but at the time of possetion i come to know that he has increased the super build up area asking me the difference.So what is the rule/act to counter the same.

Comment from H.M.SETHIA
Time: June 17, 2011, 7:04 am

WE WOULD LIKE TO KNOW CAN THE REAL ESTATE DEVELOPER CAN TAKE ECB LOAN TO DEVELOP TOWNSHIP OR CONSTRUCTION AND IF SO ON WHAT TERMS

Comment from Prashant karnawat
Time: March 24, 2012, 1:50 pm

We wish to avail External Commercial Borrowing for township project. Could you be kind enough to suggest me a few names to whom we can contact for the same so he can arrange the ECB.

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