RBI tightens norms for deposit taking HFCs

According to the revised guidelines, the RBI proposed to reduce the ceiling on the quantum of public deposits that a deposit-taking housing finance company can accept from 3 times to 1.5 times its net owned fund (NoF). As a result, deposit-taking HFCs holding deposits in excess of the revised limit will not accept fresh public deposits or
renew existing deposits until they conform to the revised limit. However, the existing excess deposits will be allowed to run off until maturity, the RBI said.

The central bank also said that total liquid assets, including unencumbered approved securities against public deposits held for deposit-taking HFCs should increase from 15 per cent by the end of March 2025. Currently, this requirement stands at 13 per cent.

The RBI also has said that HFCs shall ensure that full asset cover is available for public deposits accepted by them at all times and they have to inform the National Housing Bank (NHB) in case the asset cover falls short of the liability on account of public deposits.

The RBI has also stated that public deposits accepted or renewed by HFCs have to be repayable after a period of 12 months or more but not later than 60 months. However, existing deposits with maturities above 60 months can be repaid as per their existing repayment profile. Currently, HFCs are allowed to accept or renew public deposits
repayable after a period of 12 months or more but not later than 120 months from the date of acceptance or renewal of such deposits.