RBI proposes stricter rules for housing finance firms

The RBI on Monday issued a draft round which proposes to harmonise laws of housing finance corporations (HFCs) with that of non-banking finance corporations (NBFCs) in a number of areas similar to minimal capital requirement and deposit taking rules.

The RBI mentioned it has carried out a overview of deposit instructions for deposit-taking HFCs, participation of HFCs in numerous by-product merchandise for hedging functions, diversification into different monetary merchandise, and adoption of technical specs beneath the account aggregator ecosystem.

The draft round proposes to overview sure instructions for deposit taking NBFCs as a part of additional harmonisation of HFC laws with these of NBFCs.

The draft round supplies for extra stringent rules for HFCs going forward. Currently, HFCs are topic to simpler prudential parameters on deposit acceptance as in comparison with NBFCs. Since the regulatory issues related to deposit acceptance is identical throughout all classes of NBFCs, it has been determined to maneuver HFCs in direction of the regulatory regime on deposit acceptance as relevant to deposit-taking NBFCs, the RBI mentioned.

Accordingly, the revised laws can be relevant to HFCs accepting or holding public deposits, the RBI mentioned.

Also, at the moment the deposit taking HFCs are required to take care of 13 per cent of liquid property towards public deposits held by them. It has now been determined that every one deposit taking HFCs want to take care of liquid property to the extent of 15 per cent of the general public deposits held by them, in a phased method.

As per the plan, deposit taking HFCs might want to take the share of liquid property to 14 per cent by September 30, 2024 and to fifteen per cent by March 31, 2025, the RBI mentioned. It has additionally been determined that the laws on protected custody of liquid property for HFCs will likely be aligned with these of NBFCs within the curiosity of harmonisation of laws, the RBI mentioned.

Besides, the proposed laws search to harmonise laws concerning appointment of brokers, price and tenure of deposits, participation in alternate traded foreign money derivatives, rate of interest futures, credit score default swaps, subject of co-branded bank cards, accounting 12 months and audit, funding via various funding funds amongst different points, as per the draft round.

Comments on the draft round are invited from NBFCs, HFCs and different stakeholders by February 29, 2024.

(With inputs from IANS)