RBI to review rules governing housing finance companies
HFCs will now be treated as one category under the non-bank finance companies.
HFCs will now be treated as one category under the non-bank finance companies. Till the time RBI issues fresh guideline NHB will continue to be governed by HFCs. The grievance redressal mechanism regarding HFCs will also continue to be with the NHB.
“Reserve Bank will carry out a review of the extant regulatory framework applicable to the HFCs and come out with revised regulations in due course,” the regulator said. “NHB will continue to carry out supervision of HFCs and HFCs will continue to submit various returns to NHB as hitherto.”
In the federal budget announced in July this year the government took away powers of the NHB to regulate mortgage finance companies. Since then the finance act has been amended conferring certain powers for regulation of Housing Finance Companies (HFCs) with Reserve Bank of India.
“NHB, besides being the refinancer and lender, is also regulator of the housing finance sector. This gives a somewhat conflicting and difficult mandate to NHB. I am proposing to return the regulation authority over the housing finance sector from NHB to RBI”, said Finance Minister Nirmala Sitharaman in her Budget speech.
The regulation of HFCs by the RBI is expected to bring in greater parity in rules governing these companies, non-bank lenders and banks.