RBI makes private placement of NCD regulations for HFCs on par with NBFCs

Reserve Bank of India

The Reserve Bank of India (RBI) on January 29 said that the regulations of private placement of non-convertible debentures of housing finance companies, will be inline with those for non-banking finance companies.

Further, they added that the existing guidelines of Housing Finance Company stand repealed. “Paragraphs 57 to 68A under Chapter XI of Master Direction – Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021 stand deleted,” RBI said.

The revised guidelines shall be applicable to all fresh private placements of NCDs (with maturity more than one year) by HFCs from the date of this circular, RBI said in a release.

Most regulations of the NBFCs for private placement of NCDs are similar to the HFCs.

NBFCs' regulations for private placement of NCDs said that NBFCs shall put in place a Board-approved policy for resource planning which, inter-alia, shall cover the planning horizon and the periodicity of private placement.

The minimum subscription per investor shall be Rs 20,000 (Rupees Twenty thousand), the issuance of private placement of NCDs shall be in two separate categories, those with a maximum subscription of less than Rs 1 crore and those with a minimum subscription of Rs 1 crore and above per investor.

Additionally, there shall be a limit of 200 subscribers for every financial year, for issuance of NCDs with a maximum subscription of less than Rs 1 crore, and such subscription shall be fully secured.