InvestorQ : What are the recent restrictions imposed by RBI on housing financing companies?
Anjana Aiyar made post

What are the recent restrictions imposed by RBI on housing financing companies?

Answer
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Arya Nanda answered.
3 months ago


RBI proposes to tighten rules governing housing finance companies or HFCs. To begin, it will define systemically important HFCs, which will be subject to a different level of compliance. Home financiers will not be allowed to lend to a real estate developer and to homebuyers in the same project. In the July 2019 budget, the government had shifted the regulation of HFCs from National Housing Bank to RBI. Now HFCs are being regulated as a category of NBFCs. Under the new definition of the RBI, housing finance will mean “financing for purchase / construction / reconstruction / renovation / repairs of residential dwelling units. This will include loans to corporates and government agencies for employee housing projects. Therefore all loans for furnishing dwelling units, against mortgage of property will be classified as non-home loans. To qualify as a HFC now, 50% of net assets should be to real estate lending of which at least 75% should be towards individual housing loans. Even the minimum net owned funds for HFCs to will be doubled to Rs.20 crore and capital adequacy requirement enhanced from 12% to 14% by March 2021.