**Executive Summary**
This document, issued by the Reserve Bank of India on January 13, 2026, contains draft amendment directions for Housing Finance Companies (HFCs) regarding the "Master Directions" issued on November 28, 2025. The amendments provide clarification on components considered in the computation of Owned Fund and come into effect immediately. Comments are being requested on the draft.
**Key Points / Main Content**
* **Purpose:**
* The amendment directions provide clarification on the components reckoned in the computation of Owned Fund for HFCs.
* **Authority and Applicability:**
* The directions are issued under sections 45L and 45MA of the Reserve Bank of India Act, 1934 and Sections 30, 30A, 32 and 33 of the National Housing Bank Act, 1987.
* These amendment directions apply to all Housing Finance Companies (HFCs).
* **Amendment Details:**
* The directions will be called the Reserve Bank of India (Housing Finance Companies) Amendment Directions, 2026.
* The Amendment Directions come into force with immediate effect.
* Paragraph 10(16) of the Master Direction is replaced with a revised definition of "Owned Fund."
* **Definition of "Owned Fund":**
* "Owned Fund" includes paid-up equity capital, preference shares compulsorily convertible into equity, free reserves (including quarterly profits), balance in share premium account, and capital reserves representing surplus arising from asset sales.
* It excludes reserves created by revaluation of assets, accumulated loss balance, book value of intangible assets, and deferred revenue expenditure.
* **Inclusion of Quarterly Profits (subject to conditions):**
* The financial statements shall be subjected to limited review on a quarterly basis by the statutory auditors.
* Such profits shall be reduced by average dividend paid in the last three years and the amount which can be reckoned for inclusion would be arrived at as under:
* EP₁ = NP+ - 0.25 \*D\*t
* Where:
* EP₁ = Eligible profit up to quarter 't' of the current financial year, t varies from 1 to 4
* NP₁ = Net profit up to quarter ‘t’
* D = average dividend paid during the last three years
* Losses in the current year shall be fully deducted from Owned Fund.
* **Right-of-Use Asset:**
* HFCs are not required to deduct a Right-of-Use (ROU) asset (created in terms of Ind AS 116-Leases) from Owned Fund, provided the underlying asset being taken on lease is a tangible asset.
**Impact Analysis**
**Stakeholder: Housing Finance Companies (HFCs)**
* **Impact:** HFCs need to understand the revised definition of "Owned Fund" and the conditions for including quarterly profits. They also benefit from the clarification on the treatment of Right-of-Use assets.
* **Action Required:** HFCs must immediately comply with the new amendment directions, adjust their calculation of Owned Funds accordingly, and are encouraged to submit comments on the draft. They should also ensure that their financial statements are reviewed quarterly by statutory auditors if they intend to include quarterly profits in their Owned Fund calculations.
Key Entities Referenced
Reserve Bank of India: India's central bank and the issuer of these directions.
Reserve Bank of India (Housing Finance Companies) Directions, 2025: The 'Master Directions' that the Amendment Directions modify.
Reserve Bank of India (Housing Finance Companies) Amendment Directions, 2026: The policy document providing amendments to the 'Master Directions' for Housing Finance Companies.
Housing Finance Companies (HFCs): The entities to which these directions apply.
Reserve Bank of India Act, 1934: The act that empowers the Reserve Bank of India, referenced as enabling the directions.
भारतीय ररजर्व बैंक
_________________________RESERVE BANK OF INDIA ______________________
www.rbi.org.in
RBI/2025-26/___
DOR.CAP.REC.No.XX/21.01.002/2025-26 January 13, 2026
All Housing Finance Companies (HFCs)
Dear Sir / Madam,
Reserve Bank of India (Housing Finance Companies) Amendment Directions,
2026 – Draft for Comments
The Reserve Bank had issued the Reserve Bank of India (Housing Finance
Companies) Directions, 2025 (hereafter referred as the ‘Master Directions’), on
November 28, 2025, as amended from time to time. There is a need to further
amend the same to provide clarification on the components reckoned in the
computation of Owned Fund.
2. Accordingly, in exercise of the powers conferred under sections 45L and 45MA of
the Reserve Bank of India Act, 1934 and Sections 30, 30A, 32 and 33 of the National
Housing Bank Act, 1987, and of all powers enabling it in this behalf, the Reserve
Bank having considered it necessary in the public interest, and being satisfied that,
for the purpose of enabling the Reserve Bank to regulate the financial system to the
advantage of the country so to do, and to prevent the affairs of any Housing Finance
Company (HFC) from being conducted in a manner detrimental to the interest of
investors and depositors or in any manner prejudicial to the interest of such HFC,
hereby, issues to every HFC the following Amendment Directions.
3. These Directions shall be called the Reserve Bank of India (Housing Finance
Companies) Amendment Directions, 2026.
4. These Amendment Directions shall come into force with immediate effect.
5. These Amendment Directions modify the Master Direction mentioned as under:
Paragraph 10(16) shall be replaced by:“10(16) “Owned Fund” means paid up equity capital, preference shares which
are compulsorily convertible into equity, free reserves including quarterly
profits, balance in share premium account, and capital reserves representing
surplus arising out of sale proceeds of asset, excluding reserves created by
revaluation of asset, as reduced by accumulated loss balance, book value of
intangible assets and deferred revenue expenditure, if any.
Inclusion of quarterly profits shall be subject to the following conditions:
(a) The financial statements shall be subjected to limited review on a
quarterly basis by the statutory auditors.
(b) Such profits shall be reduced by average dividend paid in the last three
years and the amount which can be reckoned for inclusion would be
arrived at as under:
EP = NP - 0.25 *D*t
t t
Where:
EP = Eligible profit up to quarter ‘t’ of the current financial year, t varies
t
from 1 to 4
NP = Net profit up to quarter ‘t’
t
D = average dividend paid during the last three years
Losses in the current year shall be fully deducted from Owned Fund.
The HFC shall not be required to deduct a Right-of-Use (ROU) asset (created
in terms of Ind AS 116-Leases) from Owned Fund, provided the underlying
asset being taken on lease is a tangible asset.”
Yours faithfully,
Sunil T S Nair
Chief General Manager
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