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HFCs Notified as Financial Institutions Under SARFAESI Act

No longer current — withdrawn, no replacement on file yet

Source: Reserve Bank of India · RBI/2021-22/91 · issued 25 Aug 2021 · ~2 min read

Quick answerGovernment of India, via Gazette Notification S.O. 2405(E) dated June 17, 2021, has notified HFCs registered under Section 29A(5) of the National Housing Bank Act, 1987 and having assets worth ₹100 crore and above as 'Financial Institution' under Section 2(1)(m)(iv) of SARFAESI Act. Consequently, the criteria prescribed under Para 105 of the Master Direction – Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021 are withdrawn with immediate effect.

What changed

Government of India, via Gazette Notification S.O. 2405(E) dated June 17, 2021, has notified HFCs registered under Section 29A(5) of the National Housing Bank Act, 1987 and having assets worth ₹100 crore and above as 'Financial Institution' under Section 2(1)(m)(iv) of SARFAESI Act. Consequently, the criteria prescribed under Para 105 of the Master Direction – Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021 are withdrawn with immediate effect.

What it means for you

HFCs meeting the new asset threshold are now directly notified as 'Financial Institution' under Section 2(1)(m)(iv) of SARFAESI Act, which may enable them to enforce security interests under that Act. The earlier RBI criteria are no longer applicable.

Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.

What banks were required to do at the time

Verify if your HFC meets the asset threshold of ₹100 crore or more to be covered under the GoI notification.
Note that the criteria under Para 105 of the Master Direction – Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021 have been withdrawn.
Review the implications of being notified as a 'Financial Institution' under SARFAESI Act for your recovery processes.

Who it affects

All Housing Finance Companies (HFCs) registered under Section 29A(5) of the National Housing Bank Act, 1987, HFCs with assets of ₹100 crore and above, Legal and recovery departments of HFCs

❓ Common questions

Regulatory timeline

Decoded by BankPulse 2026-06-18 07:37 IST
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn 03 Aug 2026, 04:00 IST

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

What is the new asset threshold for HFCs to be considered financial institutions under SARFAESI Act?

HFCs must have assets of ₹100 crore or more, as per the GoI Gazette Notification S.O. 2405(E) dated June 17, 2021.

Does this notification replace the earlier RBI criteria?

Yes, the criteria prescribed under Para 105 of the Master Direction – Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021 have been withdrawn with immediate effect.

What benefits do HFCs get from being notified as financial institutions?

They are notified as 'Financial Institution' under Section 2(1)(m)(iv) of SARFAESI Act, which may enable them to enforce security interests under that Act.

📜 This document’s life story (1 recorded event, each backed by RBI’s own words)

Repealed by RBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)

RBI’s words: “Official withdrawal register entry #287: DOR.FIN.REC.No.41/03.10.136/2021-22 — "Notification as 'Financial Institution' under Section 2(1)(m)(iv) of Securitisation and Reconstruction of Financial Asse”

📜 Read the original circular — full text as issued by RBI

RBI/2021-22/91
 DOR.FIN.REC.No.41/03.10.136/2021-22
 August 25, 2021
 All Housing Finance Companies (HFCs)
 Dear Sir/ Madam,
 Notification as ‘Financial Institution’ under Section 2(1)(m)(iv) of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act)
 Please refer to Para 105 of Master Direction – Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021 wherein certain criteria have been prescribed for notification of HFCs as ‘Financial Institution’ under Section 2(1)(m)(iv) of the SARFAESI Act.
 2. In this connection, Government of India (GoI) has, vide its Gazette Notification No. S.O. 2405(E) dated June 17, 2021 notified the HFCs registered under Section 29A(5) of National Housing Bank Act, 1987 and having assets worth ₹100 crore & above, as ‘Financial Institution’ under Section 2(1)(m)(iv) of SARFAESI Act, 2002. In view of revision of the criteria for notification as ‘Financial Institution’ as per the abovementioned Gazette notification of GoI, the criteria prescribed under Para 105 of the aforesaid Master Direction are withdrawn with immediate effect.
 3. The Master Direction – Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021 is being modified accordingly.
 Yours faithfully,
 (J.P. Sharma)
 Chief General Manager

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2021-22/91 · issued 25 Aug 2021. The plain-English explanation above is BankPulse’s own independent summary.

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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12151&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.