RBI Releases Proposed Changes In Regulations Applicable To Housing Finance Companies (HFCs)

RBI today released proposed changes in regulations applicable to Housing Finance Companies (HFCs) for public comments. The central bank noted that post transfer of regulation of HFCs from National Housing Bank (NHB) to Reserve Bank with effect from August 09, 2019, a Press Release dated August 13, 2019 was issued stating that Reserve Bank will carry out a review of the extant regulatory framework applicable to HFCs and come out with revised regulations in due course, and till such time HFCs shall continue to comply with the directions and instructions issued by NHB.

The Reserve Bank has undertaken the said review and has identified a few changes which are proposed to be prescribed for HFCs. These include: Defining principal business and qualifying assets for HFCs, Defining the phrase 'providing finance for housing' or 'housing finance', Classifying HFCs as systemically important (asset size of Rs 500 crore & above) and non-systemically important (asset size less than Rs 500 crore); and Reserve Bank's directions on Liquidity Risk framework &, LCR, securitisation, etc.for NBFCs, to be made applicable to HFCs.

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