RBI moots tighter rules to harmonise norms of housing finance firms, NBFCs

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Reserve Bank of India on Monday (January 15) issued a draft framework seeking to harmonise regulations of Housing Finance Companies (HFCs) with those of Non-banking Finance Companies (NBFCs) in several areas including deposit directions. The banking regulator has invited comments from NBFCs (including HFCs) and other stakeholders by February 29, 2024. The RBI, in its circular, said it has reviewed the deposit directions for deposit-taking HFCs, participation of HFCs in various derivative products for hedging purposes, diversification into other financial products, adoption of technical specifications by HFCs under the Account Aggregator ecosystem, etc.

and has proposed tighter regulations for housing finance firms. The draft circular also proposes to review certain directions for deposit-taking NBFCs. The RBI, in its draft circular, proposed stricter regulations for housing finance companies comparable to NBFCs.

Currently, HFCs accept public deposits and are subject to more relaxed prudential parameters on deposit acceptance as compared to NBFCs. “Since the regulatory concerns associated with deposit acceptance are same across all categories of NBFCs, it has been decided to move HFCs towards the regulatory regime on deposit acceptance as applicable to deposit-taking NBFCs and specify uniform prudential parameters as prescribed under Master Direction – Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions 2016", the RBI said. Accordingly, the revised regulations would apply to HFCs accepting or holding public deposits, the apex bank said.