RBI new regulation declares Housing Finance Companies (HFCs) to be treated as NBFCs.

By Abhay Shah, Realty Quarter

On August 13, the Reserve Bank said housing finance companies (HFCs) will be treated for regulatory purposes as one of the categories of NBFCs and will be under their direct supervision.

The Finance (No 2) Act, 2019 (23 of 2019) modified the National Housing Bank Act, 1987, which conferred on Reserve Bank of India certain authority to regulate Housing Finance Companies (HFC), it said in a statement. The direction of the RBI comes after the central government’s notice, it added.

Minister of finance Nirmala Sitharaman in her maiden 2019-20 budget speech in early July announced that the National Housing Bank (NHB) will not remain as the HFC regulator.

“HFCs will now be considered for regulatory purposes as non-banking financial companies (NBFCs), and the existing regulatory framework applicable to these HFCs will also be reviewed by the Reserve Bank and revised regulatory provisions will follow in due course,” the apex bank said in the publication.

Meanwhile, until the Reserve Bank publishes a modified framework, HFCs will proceed to follow the directions and guidelines given by the National Housing Bank (NHB).

“NHB will proceed to monitor HFCs and HFCs will proceed to send different returns to NHB as they have done so far. The grievance redressal process for HFCs will also continue to be with the NHB,” the RBI said.