RBI on February 17, 2021 has issued the Master Direction – Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021. The Reserve Bank of India, for the purpose of enabling the Bank to regulate the financial system to the advantage of the country and to prevent the affairs of any Housing Finance Company (HFCs) from being conducted in a manner detrimental to the interest of investors and depositors or in any manner prejudicial to the interest of such HFCs, has issued these directions.
The master directions provides that for the purpose of accounting;
Every HFC shall, after taking into account the degree of well-defined credit weaknesses and extent of dependence on collateral security for realization, classify its lease/ hire purchase assets, loans and advances and any other forms of credit into the following classes, namely:
- Standard assets
- Sub-standard assets
- Doubtful assets
- Loss assets
Quoted current investments shall, for the purpose of valuation, be grouped into the following categories,
- Equity shares
- Preference shares
- Debentures and bonds
- Government securities including treasury bills
- Units of mutual fund
- Others
