What changed
RBI has replaced the existing Chapter XI guidelines on private placement of NCDs by HFCs with the NBFC Scale Based Regulation rules (para 58 of Master Direction 2023). The earlier HFC-specific paragraphs 57 to 68A have been deleted. A new paragraph 56A has been inserted to apply the NBFC rules mutatis-mutandis to HFCs.
What it means for you
HFCs must now comply with the same NCD private placement norms as NBFCs, potentially altering disclosure, rating, and allotment procedures. This harmonization simplifies compliance for entities operating as both HFC and NBFC. Existing HFC-specific exemptions or requirements under the old chapter are no longer valid for new issuances.
What you must do
- Review the NBFC Scale Based Regulation Master Direction (2023) para 58 for NCD private placement rules.
- Update internal policies and documentation for NCD issuances to align with NBFC norms.
- Ensure all fresh private placements of NCDs (maturity >1 year) from January 29, 2025 follow the new framework.
- Train compliance and treasury teams on the repealed HFC-specific chapter and new requirements.
Who it affects
All Housing Finance Companies (HFCs), Compliance departments of HFCs, Treasury and fund-raising teams of HFCs
Does this circular apply to existing NCDs issued before January 29, 2025?
No, the revised guidelines apply only to all fresh private placements of NCDs (with maturity more than one year) by HFCs from the date of the circular.
What specific NBFC rules are now applicable to HFCs?
The instructions in para 58 of the Master Direction – RBI (NBFC – Scale Based Regulation) Directions, 2023 (as amended) on raising money through private placement by NBFCs apply mutatis-mutandis to HFCs.
Which paragraphs of the HFC Master Direction have been deleted?
Paragraphs 57 to 68A under Chapter XI of the Master Direction – Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021 stand deleted.