Never miss a great news story!
Get instant notifications from Economic Times
AllowNot now


You can switch off notifications anytime using browser settings.
11,921.50-96.9
Stock Analysis, IPO, Mutual Funds, Bonds & More

RBI withdraws some exemptions granted to HFIs

Like every NBFC, housing finances are too now mandated to create a reserve fund and transfer minimum 20% of its net profit every year to the fund before any dividend is declared.

, ET Bureau|
Nov 11, 2019, 09.31 PM IST
0Comments
BCCL
rbi--bccl-1200
The Reserve Bank of India has withdrawn some exemptions granted to mortgage finance companies in terms of complying with regulations such as provisions and creation of reserve fund that would put them on par with other non-banking finance companies. This has followed the shift of regulation of housing finance companies to the Mint Street from the National Housing Bank. Many of the changes are technical in nature.

Like every NBFC, housing finances are too now mandated to create a reserve fund and transfer minimum 20% of its net profit every year to the fund before any dividend is declared. Earlier, HFCs were exempted from this clause.

These entities are now barred from appropriating sum from the reserve fund, unless there is specific direction from RBI. Every such appropriation has to be reported to within 21 days from the date of such withdrawal, RBI said,

Following the withdrawal of exemptions, the winding up clause for NBFC will also be applicable to housing finance companies if one fails to pay debt.

The government in its budget announced in July took away powers of the NHB to regulate mortgage finance companies. In step, RBI will now have the power to inspect HFCs statements submitted by HFCs.
Comments
Add Your Comments
Commenting feature is disabled in your country/region.
Download The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.

Other useful Links


Follow us on


Download et app


Copyright © 2019 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service