Mumbai: The Reserve Bank of India (RBI) on Tuesday said housing finance companies (HFCs) will be treated as a category of non-banks, adding, it will release a revised regulatory framework for these entities.
This comes after the Finance Act, 2019 amended the National Housing Bank Act, 1987, conferring certain powers for regulation of HFCs with the Reserve Bank of India.
“HFCs will henceforth be treated as one of the categories of non-banking financial companies (NBFCs) for regulatory purposes. Reserve Bank of India will carry out a review of the extant regulatory framework applicable to HFCs and come out with revised regulations in due course," the central bank said.
In the meantime, HFCs will continue to comply with the directions issued by the National Housing Bank (NHB) till the RBI issues a revised framework.
Moreover, the NHB will continue to carry out supervision of HFCs and they will continue to submit various returns to NHB. The grievance redressal mechanism with regard to HFCs will also continue to be with the NHB.
“A housing finance institution, which is a company, desirous of making an application for registration under sub-section 2 of section 29A of the National Housing Bank Act, 1987 (as amended by Act 23 of 2019) may approach the Department of Non-Banking Regulation, Reserve Bank of India," the RBI said on Tuesday.
In her maiden Budget speech on 5 July, finance minister Nirmala Sitharaman had proposed an amendment to Section 45-IA of the RBI Act 1934 in the Finance Bill.
The amended Act empowers the central bank to supersede the board of NBFCs (other than those owned by the government) and enable resolution of financially troubled NBFCs through merger or splitting them into viable and non-viable units called bridge institutions. The central bank can also now remove auditors, call for audit of any group company of an NBFC and have a say over the compensation of the senior management.