RBI composes new draft norms for Home Loans lenders

The RBI composes a draft that has given a long and easy road for agreement. Since, it wishes to ease rules governing housing finance companies (HFC’s). Also, non-banking finance companies (NBFC’s).

RBI composes new draft norms for Home Loan lenders. The RBI composes a draft that has given a long and easy road for agreement. Since, it wishes to ease rules governing housing finance companies (HFC’s). Also, non-banking finance companies (NBFC’s). The draft norms were released on Wednesday. Moreover, it largely talks about existing rules for HFC’s on capital adequacy. But it has been able to define the business more accurately. Which, is a progressive path for increasing capital adequacy, has also been proposed.

Draft Norms for HFC’s and NBFC’s

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The new definition leaves out loan against property from being labeled as a housing loan. However, only if the proceeds are used for anything other than. Buying another residential property. Also, this could prompt reclassification by some lenders. Which states HFC’s should have 75% of their loans to individuals and those lenders. Which do not meet this criteria time until Financial Year 24. In order to do so. Also, most HFC’s are already complying with this criteria. Multiple analysts have said. However, some players such as Piramal Enterprises Ltd may not meet the criteria. According to analysts at Motilal Oswal Financial Services. Since, the share of individual loans in Piramal’s book is just 11%, the brokerage firm pointed out.

Lest, to avoid double exposure to a project. There are ways of lending to the developer. As well as the buyer of the house.  Furthermore, the central bank has proposed some tightening. Which, pertains to real estate projects belonging to the same group as the HFC’s comes under. “The HFC’s can either undertake an exposure on the group company. Or in real estate business OR lend to retail individual home buyers in the projects of group entities. But not do both.” the draft norms clearly stated. Here too, analysts believe that most lenders are prudent enough on exposures.

Even so, HFC’s belonging to large groups may have to re-look at their exposures. Besides, HFC’s would need to maintain liquidity coverage ratio and beef up their capital adequacy ratio to 14%. In the next one year and 15% by Financial Year 22.