MUMBAI (TIP): The Reserve Bank of India has allowed real estate developers and housing finance companies to raise funds overseas for low-cost housing projects. Developers and housing finance companies will be permitted to borrow $1 billion in 2012-13 under the lowcost affordable housing scheme, RBI said in a notification on Monday.

The regulator said it will review the borrowing limit every year. Developers with minimum five years of experience in residential projects and those who have not defaulted in any of their financial commitments to banks or any other agencies will be eligible to raise funds overseas.

The project for which the builder is raising funds should not be involved in any litigation. RBI has also made it mandatory that the project should be in conformity with the provisions of master plan/ development plan of the area. “The layout should conform to the land use stipulated by the town and country planning department for housing projects,” RBI said. “All necessary clearances from various bodies including revenue department with respect to land usage/environment clearance, etc are available on record.” Housing finance companies that are registered with the National Housing Bank and have a minimum capital of Rs 50 crore are eligible to raise funds overseas, RBI said.

Bad loans of such companies should not exceed 2.5% of the net advances and it should have minimum net owned funds of about Rs 300 crore for the past three years to borrow overseas.