The Reserve Bank of India (RBI) has imposed harsher requirements on Housing Finance Companies (HFCs) to align their public deposit norms with those of Non-Banking Financial Companies (NBFCs)

Description

The Reserve Bank of India (RBI) has imposed harsher requirements on Housing Finance Companies (HFCs) to align their public deposit norms with those of Non-Banking Financial Companies (NBFCs). This action is intended to improve regulatory parity between the two sectors.

Deposit Limits Were Revised

• Ceiling Reduction- The RBI has reduced the amount of public deposits that HFCs can hold from three to 1.5 times their net owned fund (NoF). HFCs that exceed this limit must cease receiving or renewing public deposits until they meet the new limitation. Existing excess deposits can mature on time.

• Maturity term- The maximum term for which HFCs can accept or renew public deposits has been decreased from 120 months to 12-60 months. Deposits with maturities longer than 60 months can be repaid according to their current terms.

Enhanced Liquidity Requirements

• Liquid Asset Ratio- HFCs must now keep liquid assets at 15% of public deposits. This is being phased in gradually, with a requirement of 14% by January 1, 2025 and 15% by July 1, 2025.

• Asset Coverage- HFCs must maintain full asset cover for public deposits at all times and disclose any shortfalls to the National Housing Bank.

Additional Regulatory Measures

• Regulatory Parity- HFCs and NBFCs will now be subject to the same restrictions when it comes to branches and agents collecting deposits.

• Investment restrictions- HFCs must establish internal restrictions approved by the board for direct investments in unquoted shares of non-subsidiary and non-group enterprises.

Hedging And Market Participation

• Hedging Instruments- HFCs can now hedge operational risks with currency futures, interest rate futures, and credit default swaps (CDS). They can purchase CDS for credit risk protection but not sell it or enter short positions.

• Market Participation- Non-deposit-taking HFCs having assets of more than Rs 1,000 crore can participate in currency options exchanges, while all HFCs can trade interest rate futures.

Welcome to Notopedia.com, your free learning platform that caters to the diverse needs of students and aspirants across a spectrum of entrance exams and educational endeavors. Whether you're preparing for highly anticipated exams like CAT 2023, NEET 2023, JEE Main, or bank job vacancies, our platform offers a wealth of resources to guide you towards success. Stay up-to-date with the latest exam dates, announcements, and results for various government recruitment exams, including SSC CGL, CHSL, NDA, and UPSC. Explore comprehensive study materials, sample papers, and exam patterns to hone your skills and boost your confidence. From important dates like CBSE Class 10 and 12 date sheets to exam-specific information like JEE Main 2023 application form date, we cover it all. Notopedia.com is your go-to source for everything from admissions and admit cards to scholarships and college information. Whether you're aiming for a career in defense, government, banking, or higher education, our free learning platform equips you with the knowledge and resources you need to excel. Join us in your educational journey and unlock a world of opportunities, guidance, and comprehensive support.

For more Updates and Information - Visit Notopedia's Bulletin Board

For Latest Sarkari Jobs - Visit Notopedia's Sarkari Jobs Section

For access to more than 20,000 Colleges - Visit Notopedia's College Section

For School Studies and Exams Preparation across 14 Boards - Visit Notopedia's School Section

For Comprehensive Preparation of Sarkari Job Exams - Visit Notopedia's Sarkari Exams Section

For Comprehensive Preparation of Competitive Exams - Visit Notopedia's College Entrance Exams Section