Housing Finance Companies

#GS3 #Economy

RBI has released a draft of the proposed changes in regulations applicable to Housing Finance Companies (HFCs) for public comments.


These changes are as follows:

  • 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 ₹500 crore & above) and non-systemically important (asset size less than ₹500 crore);
  • Reserve Bank’s directions on Liquidity Risk framework &, LCR, securitisation, etc., for NBFCs, to be made applicable to HFCs;
  • HFCs should not be simultaneously allowed to lend to a real estate developer as well as homebuyers in the developer’s project 
  • The proposed changes in the rules have come following RBI’s taking over as the regulator of mortgage lenders from National Housing Bank (NHB) in August 2019.
  • Following the review of the rules, home financiers will now be regulated as a category of non-banking financial companies. 


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