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RBI Tweaks Risk Weights for HFC Home Loans and CRE

No longer current — withdrawn, no replacement on file yet

Source: Reserve Bank of India · RBI/2024-25/62 · issued 12 Aug 2024 · ~2 min read

Quick answerRBI has capped the risk-weighted assets computed for undisbursed housing/other loan amounts for HFCs at the RWA for an equivalent disbursed loan, and reduced the risk weight on standard CRE-Residential Building exposures to 75%. Effective from August 12, 2024.

What changed

First, for undisbursed housing/other loan amounts, the risk-weighted assets computed under step 1 and step 2 of paragraph 6.3.1 of the Master Direction are now capped at the RWA for an equivalent disbursed loan. Second, the risk weight for standard fund-based and non-fund based exposures to 'Commercial Real Estate – Residential Building' has been set at 75%, while non-standard exposures remain at 100% under 'Other Assets' as per Sr. No. 6(d) of paragraph 6.2.

What it means for you

HFCs will now have a more consistent capital treatment between disbursed and undisbursed loan exposures, preventing a potential anomaly that could inflate capital requirements. The lower 75% risk weight for standard CRE-Residential Building exposures reduces capital charge for performing loans, freeing up capital for further lending. Non-standard CRE exposures still attract the higher 100% risk weight, maintaining prudence.

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

Update your RWA computation models to cap undisbursed loan RWA (computed per step 1 and step 2 of paragraph 6.3.1) at the equivalent disbursed loan RWA.
Reclassify standard CRE-Residential Building exposures to the 75% risk weight category from the date of the circular.
Ensure non-standard CRE-Residential Building exposures remain at 100% risk weight under 'Other Assets'.
Review and adjust capital adequacy calculations to reflect these changes from the circular's date.

Who it affects

Housing Finance Companies (HFCs), Risk management teams at HFCs, Compliance and capital planning departments

❓ Common questions

Regulatory timeline

Stated effective date Effective from August 12, 2024
Decoded by BankPulse 2026-06-18 02:58 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).

Does the 75% risk weight apply to all CRE-Residential Building exposures?

No, it applies only to standard (performing) exposures. Non-standard exposures still carry a 100% risk weight under the 'Other Assets' category as per Sr. No. 6(d) of paragraph 6.2.

When do these changes take effect?

The instructions are applicable from the date of the circular, August 12, 2024. No transition period is provided.

Does this circular affect any other instructions in the Master Direction?

No, all other instructions in the Master Direction remain unchanged. Only the two specific modifications mentioned are effective.

📜 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 #105: DOR.CRE.REC.33/08.12.001/2024-25 — "Review of Risk Weights for Housing Finance Companies (HFCs)" dated August 12, 2024”

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

RBI/2024-25/62
 DOR.CRE.REC.33/08.12.001/2024-25
 August 12, 2024
 Housing Finance Companies
 Madam/ Dear Sir,
 Review of Risk Weights for Housing Finance Companies (HFCs)
 Please refer to Master Direction – Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021 dated February 17, 2021 , as updated from time to time. On a review, it has been decided to carry out the following modifications:
 (i) Risk weighted assets for undisbursed amount of housing loans/other loans – In order to address a potential anomaly in computation of risk weighted assets for undisbursed amount of housing loans/other loans vis-à-vis that for an equivalent disbursed amount of similar exposures, it has been decided that the risk weighted assets computed for undisbursed amount of housing loans/other loans as per step 1 and step 2 of paragraph 6.3.1 of the Master Direction ibid, shall be capped at the risk weighted asset computed on a notional basis for equivalent amount of disbursed loan.
 (ii) Risk weight for Commercial Real Estate – Residential Building – With reference to Sr. No. 3(d)(i)(a) under paragraph 6.2, the risk weight of fund- based and non-fund based exposures to ‘Commercial Real Estate-Residential Building’, which are classified as standard , shall be 75 per cent. For exposures under this category, which are not classified as standard , the risk weight shall be as per the category ‘Other Assets (Others)’ as indicated at Sr. No. 6(d) of paragraph 6.2 of the Master Direction ibid (which presently is at 100 per cent).
 2. The above instructions shall be applicable from the date of issue of this circular. All other instructions of the Master Direction ibid remain unchanged.
 Yours faithfully,
 (Vaibhav Chaturvedi)
 Chief General Manager

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2024-25/62 · issued 12 Aug 2024. 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=12720&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.