The revised regulations are effective immediately, unless specified otherwise, the central bank said
The Reserve Bank of India (RBI) on Monday proposed to tighten regulations for housing finance companies (HFCs) that accept public deposits, in a bid to align norms with non-banking financial companies (NBFCs).
The Reserve Bank of India, in a draft circular, proposed all deposit-taking HFCs raise their total liquid assets, along with unencumbered approved securities, to 15% of public deposits, from 13% currently, by the end of March 2025.
“Since the regulatory concerns associated with deposit acceptance is same across all categories of NBFCs, it has been decided to move HFCs towards the regulatory regime on deposit acceptance as applicable to deposit-taking NBFCs and specify uniform prudential parameters,” the RBI said.
The central bank has also proposed the ceiling on public deposits held by HFCs be reduced to 1.5 times of net-owned funds from 3 times.
Housing finance companies’ public deposits shall be repayable between one year to five years, as per the circular.
Since the transfer of regulation of HFCs from the National Housing Bank to the RBI from August 2019, the central bank has been issuing regulations that treat HFCs as a category of NBFCs.
The RBI proposed on Monday that housing finance companies’ boards set limits for investments in unlisted shares. It also proposed HFCs be allowed to hedge risks arising from their operations.
The RBI has sought comments on the draft circular from stakeholders by Feb. 29.
First Published: Jan 15 2024 | 5:16 PM IST
