Housing finance companies to be treated as NBFCs; come under RBI oversight

The Reserve Bank on Tuesday said housing finance companies (HFCs) will be treated as one of the categories of NBFCs for regulatory purposes and it will come under its direct oversight.

The Finance (No 2) Act, 2019 (23 of 2019) has amended the National Housing Bank Act, 1987, conferring certain powers for regulation of Housing Finance Companies (HFC) with Reserve Bank of India, it said in a release.

The RBI direction comes after notification issued by the central government, it added.

Finance Minister Nirmala Sitharaman in her maiden Budget 2019-20 speech in early July had announced that the National Housing Bank (NHB) will not remain as the regulator for the HFCs.

"HFCs will henceforth be treated as one of the categories of Non-Banking Financial Companies (NBFCs) for regulatory purposes. Reserve Bank will carry out a review of the extant regulatory framework applicable to the HFCs and come out with revised regulations in due course," the apex bank said in the release.

In the meantime, HFCs shall continue to comply with the directions and instructions issued by the National Housing Bank (NHB) till the Reserve Bank issues a revised framework, it added.

"NHB will 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," the RBI said.