RBI pull-out certain exemptions from housing finance companies

• RBI can now inspect any HFC to verify the correctness or completeness of any statement, furnished to the central bank
• HFCs are currently exempt from the provisions of Chapter IIIB of Reserve Bank of India Act, 1934

The Reserve Bank of India has pull-out certain exemptions granted to housing finance companies, putting its regulations on a par with those of non-banking financial companies NBFCs .

This comes after the Finance Act, 2019 amended the National Housing Bank Act, 1987, conferring certain powers for regulation of   HFCs with the Reserve Bank of India RBI.

The central bank said HFCs are currently exempt from the provisions of Chapter III B of Reserve Bank of India Act, 1934. However, on a review, it has been decided to withdraw these exemptions and make the provisions of Chapter III B except Section 45-IA of Reserve Bank of India Act applicable to them.

RBI can, on being satisfied that the HFC is unable to pay its debt or if its continuance is detrimental to public interest, order it’s winding it up. It will be considered that the HFC is unable to pay its debt if it fails to meet within five working days any lawful demand.

The central bank can now inspect any HFC to verify the correctness or completeness of any statement, furnished to RBI.