HOUSING FINANCE COMPANIES (HFCs)

About:

• The RBI does not regulate the housing finance companies. These are regulated by the National Housing Bank (NHB).
  
  
• But the RBI is of the view that the since the liquidity crisis of the HFCs could have a spillover effect on the other segments in the financial sector, including banks, and hence, could affect financial stability, it was necessary to monitor these entities on a regular basis
  
  
• For this purpose, a general manager in National Housing Bank has been asked to be in regular communication with a chief general manager in the department of non-banking supervision (DNBS) of the RBI.
  
  
• Background: The non-banking financial sector, particularly the mortgage lenders, are fighting a crisis of confidence with banks having stopped lending to these entities since the debt default by IL&FS in September last year.