Guidelines for Mortgage Guarantee Companies
The Reserve Bank of India (RBI) has issued guidelines for the registration and operations of Mortgage Guarantee Companies (MGCs) under Section 45L(1)(b) of the Reserve Bank of India Act, 1934.
Scope and Applicability: These guidelines are applicable to all MGCs registered with the RBI.
Definitions: MGCs are defined as companies that provide mortgage guarantees to lenders against defaults by borrowers.
Registration: MGCs must register with the RBI and meet the minimum capital requirement of ₹100 crores.
Capital Adequacy: MGCs must maintain a minimum capital adequacy ratio of 15%.
Funding Options: MGCs can accept public deposits and access external commercial borrowings, subject to certain conditions.
Reserves: MGCs must create and maintain contingency reserves to absorb potential losses.
Prudential and Accounting Norms: MGCs must comply with prudential and accounting norms specified by the RBI.
These guidelines aim to ensure that MGCs operate in a prudent and transparent manner, and provide a framework for their registration and operations.
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