RBI announces revised guidelines for NBFCs and HFCs

Mumbai: The Reserve Bank of India has issued revised norms related to the acceptance of public deposits by housing finance companies (HFCs). The new norms aim to harmonize the guidelines for Non-banking Financial Companies (NBFCs) and HFCs.

Under the revised regulations, the RBI has decreased the amount of public deposits that a deposit-taking HFC can keep. The limit has been reduced from 3 times to 1.5 times the HFC net-owned fund. Consequently, those deposit-taking HFCs who have deposits over the revised limit will not be able to accept new deposits or renew existing deposits until they meet the new limit.

Other important instructions include: 

• Deposit-taking HFCs are now required to maintain 15% liquid assets against the public assets held by them as compared to an earlier requirement of 13%.
• New deposits accepted or renewed by HFCs will have to be repaid by them after a period of 12 months or more but not later than 60 months.
• All rules applicable for  NBFCs on branches and appointment of agents to collect deposits will apply to deposit-taking HFCs as well.
• HFCs will be allowed to hedge risks arising out of their operations and issue co-branded credit cards
• Non-deposit-taking HFCs will be allowed to participate in currency exchanges. All HFCs can participate in interest rate future exchanges.

The new rules will apply to HFCs from January 1, 2025.

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