RBI to regulate HFCs instead of National Housing Bank
Presenting her first Union Budget, Finance Minister NirmalaSitharaman proposed to transfer the regulatory authority over housing finance sector to the Reserve Bank of India (RBI) from the National Housing Bank (NHB).
Sitharaman told the LokSabha that the housing sector needs efficient and conducive regulation and that NHB plays a difficult and contracitory role of being both lender and regulator of the housing finance sector. “Efficient and conducive regulation of the housing sector is extremely important in our context. The National Housing Bank (NHB), besides being the refinancer and lender, is also regulator of the housing finance sector. This gives a somewhat conflicting and difficult mandate to NHB,” she said.
“I am proposing to return the regulation authority over the housing finance sector from NHB to RBI,” the minister said. Necessary proposals have been placed in the Finance Bill,” she added.
This step is one among other steps announced on Friday to strengthen and better regulate the NBFC sector as non-banking financial companies (NBFC) in the country are facing severe liquidity crisis. The crunch situtation came to light after the infrastructure lending major IL&FS last September defaulted on a commercial paper.