**Summary:**
This circular, RBI/2024-25/62 DOR.CRE.REC.3308/12.001/2024-25 dated August 12, 2024, issued by the Reserve Bank of India (RBI), addresses a review of risk weights for Housing Finance Companies (HFCs). The circular modifies the Master Direction - Non-Banking Financial Company - Housing Finance Company (Reserve Bank Directions), 2021, dated February 17, 2021.
The key modifications are as follows:
1. **Risk Weighted Assets for Undisbursed Amount of Housing Loans/Other Loans:** The risk-weighted assets computed for undisbursed amounts of housing loans/other loans will be capped at the risk-weighted asset computed on a notional basis for an equivalent amount of disbursed loan. This aims to address a potential anomaly in the computation of risk-weighted assets.
2. **Risk Weight for Commercial Real Estate - Residential Building:** The risk weight for fund-based and non-fund-based exposures to Commercial Real Estate – Residential Building, classified as standard, is set at 75%. Exposures in this category not classified as standard will carry a risk weight of 100%, as per the "Other Assets" category.
These instructions are effective from the date of the circular's issuance. All other instructions outlined in the Master Direction remain unchanged.
For further information, contact the Department of Regulation, Central Office, Reserve Bank of India, Central Office Building, 12th-13th Floor, Shahid Bhagat Singh Marg, Fort, Mumbai – 400001. Phone: 22661602, 22601000; Fax: 022-2270 5691. Inquiries may be directed to Vaibhav Chaturvedi, Chief General Manager.
Key Entities Referenced
Reserve Bank of India: The central bank of India, the primary regulator mentioned in the document.
Housing Finance Companies: Financial institutions that are the target of the policy review.
Master Direction Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021: The primary regulatory document being amended/reviewed.
Risk Weighted Assets: A key concept in banking regulation, specifically for housing loans, that is under review.
Commercial Real Estate-Residential Building: A category of real estate loans with a specific risk weight.
Mumbai, Maharashtra: Location of the Central Office of the Reserve Bank of India.
Vaibhav Chaturvedi: Chief General Manager at Reserve Bank of India, signatory of the circular.
भारतीय �रज़वर् बैंक
RESERVE BANK OF INDIA
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
______________________________________________________________________
िविनयमन िवभाग, क��ीय कायार्लय, क��ीय कायार्लय भवन, 12व�/ 13व� मंिज़ल, शहीद भगत �संह माग,र् फोटर्, मुंबई - 400001
टेलीफोन/ Tel No: 22661602, 22601000 फैक्स/ Fax No: 022-2270 5691
Department of Regulation, Central Office, Central Office Building, 12th/ 13th Floor, Shahid Bhagat Singh Marg, Fort,
Mumbai – 400001
�हदं ी आसान ह,ै इसका �योग बढ़ाइएcategory, 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
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