Some guidelines have been issued by the Reserve Bank of India for housing finance companies. These instructions are related to the Liquidity Coverage Ratio, Risk Management, Asset Classification and Loan to Value Ratio.
New Delhi: Some guidelines have been issued by the Reserve Bank of India for housing finance companies. This instruction is related to the Liquidity Coverage Ratio, Risk Management, Asset Classification and Loan to Value Ratio. The central bank said that all these instructions have been issued with immediate effect. The RBI said that one of the major reasons behind issuing these new instructions is that Housing Finance Companies (HFCs) should not do any such work, which would harm investors and depositors.
RBI amended rules for housing finance companies, know what this means
The Reserve Bank has given information about this on Wednesday. Apart from this, RBI has issued Master Directions-Non-Banking Financial Company-Housing Finance Company (Reserve Bank) Directions, 2021 in this context.
What is the new rule?
Let us tell you that according to the new guidelines issued, HFCs giving loans by guaranteeing the listed shares will have to maintain a loan to value ratio of 50%. At the same time, HFCs will have to maintain an LTV ratio of 75% on the loan against the guarantee of gold jewelery.
What is HFC?
Let us tell you that if 60% of the total assets of any non-banking financial company is given to the housing sector for loan, then it is called HFC. RBI has said that HFCs will have to maintain a liquidity buffer in terms of liquidity coverage ratio. This will help them with this fund in case of any cash related problems in future.
The Reserve Bank of India is constantly making new efforts to ensure the smooth functioning of the country’s banking and finance sector. He has also taken several such steps to ensure adequate liquidity after Kovid-19.
