New Delhi: Finance minister P Chidambaram today said in New Delhi that the recent curbs on external commercial borrowings would help slow the flow of foreign debt into the real estate sector.

Currently, real estate companies are already barred from mopping up ECB''s, 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.

On Friday the finance ministry had barred those setting up integrated townships from raising ECB''s and made it difficult for small real estate companies from raising such borrowings by lowering the ceiling on such debts.

Chidambaram told reporters, "Now the window has been narrowed down. We hope that flow of external debt to real estate sector will slow down," while refusing to comment, on the likelihood of further curbs on overseas funds.

The government is concerned about excessive external funds raised by smaller players in real estate sector, where prices have almost doubled in the past two years and adds to inflationary trends.

According to figures released by Reserve Bank, 812 companies had raised about $20.24 billion debt through ECBs during the April 2006-February 2007 period, substantially higher than the internal cap of $22 billion imposed by the government.