The Reserve Bank of India (RBI) on Wednesday released new rules for the governing home finance companies putting some regulation on lending to builders and double’s the requirement of minimum net owned fund. This step ensures towards the strengthening of the capital base for small housing finance companies.
RBI has also proposed a new framework on home finance and restrict lending by HFC to lend a real estate developer or home buyers in the developer’s project.
From the past regulation from National Housing Bank (NHB) in August 2019, RBI takes over and proposed some changes in the rules. With new category of rule home financiers will be regulated as non-banking financial companies.
RBI proposed this to achieve minimum Net Owned Fund (NOF) for HFCs with the current requirement of Rs.10 crore to Rs.20 crore. For previous HFCs the glide path would be required to reach Rs.15 crore within 1 year and Rs.20 crore within 2 years.
HFCs exposure in its terms of lending and investment, directly or indirectly cannot exceed more than 15 % of owned funds for single entity in the group and 25% of owned funds for all such group entities.
RBI seeks public comments on its draft framework from HFCs, market holders and other stakeholders before issuing the final guidelines by July 2015, 2020. This would be done over email with subject line ‘Feedback – proposed changes to the regulations applicable to HFCs.
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