The RBI has issued the revised regulatory framework for HFCs.
The RBI further said that it would be incumbent upon such HFCs whose NOF currently stands below Rs 20 crore to submit a statutory auditor‘s certificate to the central bank within a month evidencing compliance with the prescribed levels.
“HFCs failing to achieve the prescribed level within the stipulated period shall not be eligible to hold the Certificate of Registration (CoR) as HFCs and registration for such HFCs shall be liable to be cancelled,” the RBI said, adding such companies will be required to approach the RBI for conversion of their CoR from HFC to NBFC-Investment and Credit Companies.
It has also been provided that HFCs will not impose foreclosure charges/pre-payment penalties on any floating rate term loan sanctioned for purposes other than business to individual borrowers, with or without co-obligants.
HFCs lending against the collateral of listed shares shall maintain a Loan to Value (LTV) ratio of 50 per cent for loans granted against the collateral of shares.
“Any shortfall in the maintenance of the 50 per cent LTV occurring on account of movement in the share prices shall be made good within seven working days,” the RBI said.
The revised framework further said that HFCs will be required to maintain a LTV ratio not exceeding 75 per cent for loans granted against the collateral of gold jewellery, and shall put in place a board approved policy for lending against gold.
All HFCs will be required to maintain a prescribed minimum percentage of total assets towards housing finance and individual housing finance.