Page 40 - Banking Finance November 2021

ARTICLE

8. Public Deposits these directions applicable to HFCs in place of present
There is a restriction under the HFCs (NHB) Direction guidelines issued by NHB. All reports in the formats given
2010 dated July 01, 2019 (NHB Directions) in relation in these Master Directions of Monitoring of Frauds may
to the acceptance of public deposits. The term 'Public however continue to be forwarded to NHB, New Delhi
Deposits' has been defined under such directions which as being done hitherto.
is similar to the definition given under the RBI Master
Direction on 'Acceptance of Public Deposits' dated 11. Information Technology Framework
August 25, 2016 (updated as on February 22, 2019) The master direction on Information Technology (IT)
("Master Directions on Acceptance of Public Deposits"), Framework for all NBFCs (with asset size above Rs 500
except that as per the definition in NHB directions, any crore (systemically important) and NBFCs with asset size
amount received from NHB or any public housing agency below Rs 500 crore) dated June 08, 2017, covers IT
are also exempt from the definition of 'Public Deposit'. Governance, IT Policy, Information & Cyber Security, IT
For the purposes of aligning the regulations of HFCs with Operations, IS Audit, Business Continuity Planning and
NBFCs, RBI now proposes to align the definition of IT Services Outsourcing. These directions are now
'Public Deposits' with the Master Directions on proposed to be made applicable to HFCs and
Acceptance of Public Deposits with an addition of consequently the Information Technology Framework
exception that any amount received by HFCs from NHB issued by NHB vide circular dated June 15, 2018 is now
or any public housing agency will also be exempt from proposed to be withdrawn.
the definition of 'Public Deposit'.
12.Securitization
9. Group entities engaged in 'Real Estate NHB has not prescribed specific guidelines on
Business' securitization. It is proposed to bring all HFCs
(systemically important and non-systemically important)
In order to address concerns on double financing due to
under the ambit of guidelines on securitization
lending to construction companies in the group and also
to individuals purchasing flats from the latter, the HFC transaction as applicable to NBFCs.
concerned may choose to lend only at one level. That is,
the HFC can either undertake an exposure on the group 13.Lending against shares
company in real estate business or lend to retail individual Currently, there are no guidelines in place for lending
home buyers in the projects of group entities, but cannot against the security of shares by HFCs. For the sake of
do both. If the HFC decides to take any exposure in its uniformity, it is proposed to extend instructions
group entities (lending and investment) directly or applicable to NBFCs to lend against the collateral of
indirectly, such exposure cannot be more than 15% of listed shares.
owned fund for a single entity in the group and 25% of
owned fund for all such group entities. As regards 14.Foreclosure charges
extending loans to individuals, who choose to buy housing As a measure of customer protection and also in order
units from entities in the group, the HFC would follow to bring in uniformity with regard to repayment of
arm's length principles in letter and spirit. various loans by borrowers of banks and NBFCs, no
foreclosure charges/ pre-payment penalties shall be
10.Monitoring of frauds levied on any floating rate term loan sanctioned for
All instructions to NBFCs with regard to monitoring of purposes other than business to individual borrowers
frauds are covered in the Master Direction - Monitoring with or without co-obligants. Since similar regulations
of Frauds in NBFCs (Reserve Bank) Directions, 2016. are currently not prescribed for HFCs, it is proposed to
These directions cover various aspects pertaining to extend these instructions to HFCs.
classification of frauds, monitoring of frauds and
reporting to the Board, to the police authorities, RBI, 15.Implementation of Indian Accounting
etc. With a view to harmonizing all instructions Standards
pertaining to fraud monitoring, it is proposed to make Instructions issued to NBFCs on Implementation of

40 | 2021 | NOVEMBER | BANKING FINANCE