On Wednesday the Reserve Bank offers to double the minimum net owned fund (NOF) requirement for housing finance companies to Rs 20 crore. The motive behind this step was to strengthen the capital base of small housing finance companies (HFC). The RBI said this while suggesting the proposed changes in the regulatory framework for HFCs.
In the draft framework, a new category was introduced based on financial parameters of systemically important HFCs and also restricted lending by HFCs by either construction companies or flat buyers of that company.
According to RBI, the existing HFCs would be given a glide path to achieve a minimum Net Owned Fund (NOF) of Rs 20 crore. It will require one year to reach Rs 15 crore and to reach Rs 20 crore, two years are required.
Currently, the HFC regulations are very common for all HFCs disregarding their asset size and ownership, the non-deposit taking HFCs (HFC-ND) with asset size of Rs 500 crore and more than that; and all deposit-taking HFCs (HFCD), disregarding the asset size, will be included in systemically important HFCs. Besides this, the HFCs with asset size below Rs 500 crore will be included in non-systemically important HFCs (HFC-non-SI).
Though some similar regulations are currently not mentioned in HFCs, however, it is proposed to extend some of these instructions to HFCs.
