Housing Finance Companies
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.