RBI tweaks norms, home loans may get cheaper

MUMBAI: In a relief to housing finance companies, the Reserve Bank has tweaked the risk weights by capping it for undisbursed loans at par with that of disbursed loans. This is likely to release growth capital that was locked for undisbursed loans and make mortgage loans cheaper.

“To address a potential anomaly in the computation of risk-weighted assets for undisbursed amounts of housing loans/other loans vis-a-vis that for an equivalent disbursed amount of similar exposures, it’s been decided that the risk-weighted assets computed for undisbursed amounts of housing loans/other loans shall be capped at the risk-weighted asset computed on a notional basis for an equivalent amount of disbursed loans,” the RBI said in circular Monday.

At the same time, the regulator segregated risk weights for standard and stressed commercial real estate–residential buildings.

The central bank said the risk weight for commercial real estate–residential buildings classified as standard would continue to be 75 percent. For exposures under this category, which are not classified as standard, the risk weight shall be 100 percent.

According to industry experts, if the risk capital that an HFC need to maintain against housing loans is reduced, it can increase their ability to lend more. As a result, home loans can become more accessible and affordable for buyers.

Premature deposit withdrawal from NBFCs

MUMBAI: The Reserve Bank has mandated non-banking financial companies (NBFCs) to pay 100% of the deposit amount within the first 3 months of accepting it if the depositor seeks a withdrawal, citing an emergency but without any interest. Issuing the revised regulations governing NBFCs and housing finance companies (HFCs) Monday, RBI said the new norms will be applicable from January 1, 2025. But the depositor will not get any interest if the money on premature withdrawals.