The Reserve Bank of India (RBI) has withdrawn certain exemptions granted to housing finance companies (HFCs), putting its regulations on a par with those of non-banking financial companies (NBFCs).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.
The central bank said HFCs are currently exempt from the provisions of Chapter IIIB 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 IIIB except Section 45-IA of Reserve Bank of India Act applicable to them.
Following the withdrawal of these exemptions, RBI can, on being satisfied that the HFC is unable to pay its debt or if its continuance is detrimental to public interest, order its 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.
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