Housing Finance Companies to be treated as NBFCs

The Reserve Bank of India (RBI) has issued a notification stating that housing finance companies (HFCs) will be treated as one of the categories of Non-Banking Financial Companies (NBFCs) for regulatory purposes and it will come under its direct oversight.

Finance Act of 2019

The Finance Act, 2019 has amended the National Housing Bank Act, 1987, conferring certain powers for the regulation of Housing Finance Companies (HFC) with Reserve Bank of India.

The Finance Minister in her budget speech had stated that the National Housing Bank (NHB) will not remain as the regulator for the HFCs. HFCs will be treated as one of the categories of NBFCs for regulatory purposes.

The Finance Minister had asked the Reserve Bank to carry out a review of the extant regulatory framework applicable to the HFCs and come out with revised regulations in due course.

Role of National Housing Bank

The RBI notification states that HFCs will continue to comply with the directions and instructions issued by the National Housing Bank (NHB) till the Reserve Bank issues a revised framework.

NHB would continue to carry out supervision of HFCs and HFCs will continue to submit various returns to NHB as hitherto. The grievance redressal mechanism with regard to HFCs will also continue to be with the NHB.