NEW DELHI: The new minister for housing and urban poverty alleviation Ajay Maken on Wednesday said that the proposal for external commercial borrowings for low-cost housing has been cleared by the Reserve Bank of India and the finance ministry and the National Housing Bank has been asked to make the draft guidelines, which will be finalised in a week.

The Reserve Bank of India and the finance ministry have indicated that they can earmark almost $1 billion for external commercial borrowings for low-cost housing. The ministry has recommended that any project with housing units below 60 sq metres of carpet area should be eligible for external commercial borrowings.

The minister also said that norms should be put in place for private builders to build at least 35% of housing units in any real estate project or 15% of the floor area ratio for economically weaker sections of the society and people in the low-income group.

Maken, who was a minister of state in the urban development ministry before his stint at the sports ministry, said that this was part of the Delhi Master Plan, and that he would now ask states to implement this in their cities across India as it would "help in stemming the growth of slums in our urban centres."

The minister on Wednesday formally launched a Credit Risk Guarantee Fund (CRGF) scheme for low-income housing for which State Bank of IndiaBSE 0.01 %, Central Bank of IndiaBSE 0.36 % and HDFCBSE 0.18 %entered into an agreement with the Credit Guarantee Trust, which will be managed by the National Housing Bank.

The minister pointed out that once states organise housing for the poor by asking developers to build 35% of units for EWS and LIG, these people would then need money to buy the houses and that is where the CRGF would become important.

The government has set up the CRGF scheme to offer credit guarantee support to housing loans up to 5 lakh, which are collateral free or third party guarantee free that are given by lending institutions for buy low-income housing in urban areas.

"We are requesting the state governments to do it (minimum 35% units for EWS) for their own cities, and we are going to link it up with the Rajiv Awas Yojana. The state governments will have to first ensure that these development control norms are implemented in their state," he said.