The Reserve Bank of India vide its notification dated 17th June 2020 has released proposed changes in regulations applicable to Housing Finance Companies (HFCs) for public comments.
A new category of systematically important HFCs based on financial parameters and restricted lending by HFCs either to a construction company or flat buyers of that company have also been proposed to be included in the draft framework.
RBI proposes to increase the minimum NOF for HFCs from the current requirement of ₹10 crore to ₹20 crore. For existing HFCs the glide path would be to reach ₹15 crore within 1 year and ₹20 crore within 2 years. This step is aimed at strengthening the capital base, especially of smaller HFCs and companies proposing to seek registration under NHB Act.
Further, the draft regulations propose to restrict lending by the HFCs to Construction Companies or individuals purchasing flats from the company.
The HFC’s exposure in its group entities (lending and investment) directly or indirectly cannot be more than 15 percent of the owned funds for a single entity in the group and 25 percent of the owned funds for all such group entities.
The Reserve Bank seeks public comments on the draft framework for consideration before issuing the final guidelines. Responses of HFCs, market participants, and other stakeholders may be sent latest by July 15, 2020, over email with subject line ‘Feedback – proposed changes to regulations applicable to HFCs.
Click here to read the notification.
