RBI proposes stricter rules for housing finance companies; View all the details here
The RBI's draft circular proposes to revise certain deposit taking guidelines of NBFCs as part of further harmonization of HFC regulations with those of NBFCs.
Mumbai: The Reserve Bank of India on Monday issued a draft circular proposing to harmonize regulations of housing finance companies (HFCs) with those of non-banking finance companies (NBFCs) in several areas such as minimum capital requirement and deposit taking. regulations. The RBI also said that it has conducted a review of the deposit guidelines for deposit withdrawals, HFCs, participation of HFCs in various derivatives for hedging purposes, diversification into other financial products and adoption of technical specifications in the account aggregator ecosystem, since That reports news agency IANS.
What does the draft circular propose?
The draft circular proposes to revise certain deposit taking guidelines of NBFCs as part of further harmonization of HFC regulations with those of NBFCs.
The draft circular also provides for stricter rules for HFCs in the future. Currently, HFCs are subject to simpler prudential parameters for deposit acceptance compared to NBFCs. Since regulatory concerns related to deposit acceptance are common to all categories of NBFCs, it has been decided to move HFCs to the deposit acceptance regulatory regime as applicable to NBFCs that accept deposits, the RBI said.
Accordingly, the revised regulations would apply to HFCs that accept or hold public deposits, the RBI said.
Current regulatory status
Moreover, deposit-taking HFCs are currently required to maintain 13 percent of their liquid assets against public deposits held by them. It has now been decided that all deposit-taking HFCs will have to maintain liquid assets in a phased manner up to 15 percent of the public deposits they hold.
Under the plan, the deposit HFCs will have to take the percentage of liquid assets to 14 percent by September 30, 2024, and to 15 percent by March 31, 2025, the RBI said. It has also been decided that regulations on safe custody of liquid assets for HFCs will be aligned with those of NBFCs in the interest of regulatory harmonization, the RBI said.
In addition, the proposed regulations aim to harmonize regulations regarding the appointment of agents, interest and maturity of deposits, participation in exchange-traded currency derivatives, interest rate futures, credit default swaps, issuance of co-branded credit cards, financial year and audit , and investments through alternative investment funds, among others, in accordance with the draft circular. NBFCs, HFCs and other stakeholders are invited to comment on the draft circular by February 29, 2024.
(With input from agencies)