Housing finance companies unlikely to face difficulty in complying with revised deposit norms: Crisil

Housing finance companies unlikely to face difficulty in complying with revised deposit norms: Crisil

A CRISIL Ratings analysis of the 121 HFCs accepting public deposits indicates most of them are de facto compliant with the revised guidelines on public deposits and liquid assets.

Along with various other operational measures, the revised norms contain three key amendments pertaining to HFCs accepting public deposits.

First, the Reserve Bank said that the minimum proportion of liquid assets held against public deposits by HFCs needs to be increased in a gradual manner from 13 per cent currently to 14 per cent by January 1, 2025, and to 15 per cent by July 1, 2025. Unencumbered approved securities held as a percentage of public deposits have also been increased.

Second, the maximum quantum of public deposits held by deposit-taking HFCs has been reduced from 3.0 times to 1.5 times of net owned funds with immediate effect.

Third, the maximum tenure of public deposits raised by HFCs has been reduced from 10 years to 5 years with immediate effect.

In general, the reliance on public deposits is limited for HFCs, with only 12 out of 94 HFCs having a deposit-taking license.

Total public deposits held by deposit-taking HFCs is estimated at Rs 25,000 crore, constituting 5 per cent of their total borrowings; however, for three HFCs, this is higher than 10 per cent.

Subha Sri Narayanan, Director, CRISIL Ratings, sadi most deposit-taking HFCs already comply with the new norms.

Crisil believes HFCs have been given adequate time to implement the guidelines. The new norms are another step by the RBI to harmonise the regime for HFCs and non-banking financial companies -- the former came under its oversight in 2019.

Crisil added this will reduce the arbitrage between different regulatory structures and ensure sharper focus on the business and operational fundamentals. (ANI)