RBI proposes tougher regulations for Housing Finance Companies

New rules to make it harder for HFCs to raise deposits

Revised guidelines released as part of phased transition towards stricter framework

The Reserve Bank of India (RBI) has issued a draft circular proposing tighter regulations for housing finance companies (HFCs). The new rules will make it more difficult for HFCs that are not in good financial health to raise deposits.

The proposed changes include:

• A ceiling on the amount of public deposits that deposit-taking HFCs can hold
• A requirement that all deposit-taking HFCs maintain a higher level of liquid assets

The RBI is also proposing a phased transition towards these tougher regulations. This will give HFCs time to adjust to the new requirements.

The new regulations are part of the RBI's ongoing efforts to strengthen the financial system. The RBI has been concerned about the rapid growth of HFCs in recent years and has said that it is important to put in place stricter regulations to ensure their stability.