RBI aligns HFCs' NCD private placement rules with NBFC regulations

The Reserve Bank of India (RBI) on Tuesday announced that the regulations for the private placement of non-convertible debentures (NCDs) by housing finance companies (HFCs) will be aligned with those applicable to non-banking financial companies (NBFCs).

 

According to a notification by the RBI, the revised guidelines will apply to all new private placements of NCDs with maturities exceeding one year by HFCs, effective immediately.

 

NBFC regulations for the private placement of NCDs require them to establish a board-approved policy for resource planning, which must include the planning horizon and the frequency of private placements.

 

The minimum subscription per investor shall be Rs 20,000. The private placement of NCDs will be categorised into two segments:

 

• NCDs with a maximum subscription of less than Rs 1 crore per investor
• NCDs with a minimum subscription of Rs 1 crore and above 

Additionally, for NCDs with a maximum subscription of less than Rs 1 crore, the total number of subscribers shall be limited to 200 per financial year, and such subscriptions must be fully secured.

 

NBFC regulations for the private placement of NCDs state that NBFCs shall put in place a board-approved policy for resource planning, which, inter alia, shall cover the planning horizon and the periodicity of private placement.