The Reserve Bank of India (RBI) proposed to tighten the rules governing home financiers, including putting restrictions on lending to builders and doubling the minimum net owned funds criterion.
The regulator’s proposal has also clearly defined home finance firms and those that are systemically i
The Reserve Bank of India (RBI) proposed to tighten the rules governing home financiers, including putting restrictions on lending to builders and doubling the minimum net owned funds criterion.
The regulator’s proposal has also clearly defined home finance firms and those that are systemically important among them. RBI has also proposed that home financiers should not be simultaneously allowed to lend to a real estate developer as well as homebuyers in the developer’s project.
The proposed changes in the rules have come following RBI’s taking over as the regulator of mortgage lenders from National Housing Bank (NHB) in August 2019. Following the review of the rules, home financiers will now be regulated as a category of non-banking financial companies.
RBI said housing finance will now mean “financing, for purchase/construction/reconstruction/ renovation/ repairs of residential dwelling unit” and some other activities, including giving loans to corporates and government agencies for employee housing projects. According to the draft regulations, RBI also classified housing finance companies as systemically important and non-systemically important.