In order to avoid dual regulation, non-banking financial companies that were Housing Finance Institutions (HFIs) were granted exemption from the provisions of Chapter IIIB of the RBI Act,1934 (provisions relating to non-banking financial institutions/NBFCs) vide notification dated 18 June, 1997. The RBI withdrew these exemptions, except the requirement of registration and net owned fund under Sec 45-IA by gazette notification of 19 November 2019. In supersession of the aforesaid notification, RBI has now issued a notification that the provisions of Sections 45-IA (Registration and net owned fund), 45-IB ( Maintenance of percentage of assets)  and 45-IC ( Reserve Fund)  of the RBI Act shall not apply to a non-banking financial company which is an HFI as defined in clause (d) of section 2 of the National Housing Bank Act, 1987.

To refer to the gazette notification dated 18 November 2020, click here.

In a separate notification, RBI has specified that the net owned fund for an HFI which is a company, to commence housing finance as its principal business or carry on the business of housing finance as its principal business, shall be twenty crore rupees [earlier ten crore rupees]. However, an HFI which already holds a Certificate of Registration issued under Section 29A of National Housing Bank Act, 1987 and has a net owned fund of less than twenty crore rupees, is allowed to continue its business with the condition that it achieves net owned fund of fifteen crore rupees before 1 April 2022 and twenty crore rupees before 1 April 2023.

To refer to the gazette notification dated 18 November 2020, click here.