Introduction
The Reserve Bank of India (RBI) has issued the Master Direction – Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021, which provides a framework for the regulation of Housing Finance Companies (HFCs).
Scope and Applicability
This Master Direction applies to all HFCs registered with the RBI, including those that are yet to commence operations.
Definition and Classification
HFCs are defined as non-banking financial companies that are engaged in the business of providing finance for housing, and are classified into two categories: Systemically Important HFCs (SIHFCs) and Non-Systemically Important HFCs (NSIHFCs).
Capital Requirements
HFCs are required to maintain a minimum net owned fund (NOF) of ₹50 crore, and a minimum capital adequacy ratio of 15%.
Prudential Norms
HFCs are required to comply with prudential norms related to asset classification, provisioning, and capital adequacy, among others.
Exposure Norms
HFCs are subject to exposure norms, including limits on exposure to individual borrowers, groups, and sectors.
Corporate Governance
HFCs are required to have a robust corporate governance framework, including a board of directors, audit committee, and risk management committee.
Disclosure and Transparency
HFCs are required to make certain disclosures, including their financial statements, and to maintain transparency in their operations.
Supervision and Enforcement
The RBI will supervise and enforce compliance with these directions, and may impose penalties for non-compliance.
Chat with the Master Direction: