Archive for month: June, 2018
IT Framework for the HFCs
/1 Comment/in Housing finance /by Vinod Kothari ConsultantsBy Vineet Ojha (finserv@vinodkothari.com)
Over the years, the Housing Finance Company (HFC) sector has grown in size and complexity. As the HFC industry matures and achieves scale, its Information Technology /Information Security (IT/IS) framework, Business Continuity Planning (BCP), Disaster Recovery (DR) Management, IT audit, etc. must also be benchmarked to best practices. To enhance the safety, security, efficiency in processes leading to benefits for HFCs and their customers, the National Housing Bank (NHB) has come up with Information Technology Framework for HFCs (“Guidelines”) vide its notification no. NHB/ND/DRS/ Policy Circular No. 90/2017-18 dated June 15, 2018. Guidelines on IT Framework for the HFC sector that are expected to enhance safety, security, efficiency in processes leading to benefits for HFCs and their customers are enclosed.
Entities to report total foreign investments to RBI
/0 Comments/in FEMA /by Vinod Kothari ConsultantsSBO Rules dilute the intent of Section 90
/0 Comments/in Amendments to the Companies Act 2013, Companies Act 2013, Corporate Laws /by Vinod Kothari ConsultantsSBO Rules in contradiction to Section 90
/0 Comments/in Amendments to the Companies Act 2013, Companies Act 2013, Corporate Laws /by Vinod Kothari ConsultantsRBI relaxes thresholds for affordable housing finance
/0 Comments/in Housing finance /by Vinod Kothari ConsultantsFinancial Services Division – finserv@vinodkothari.com
The Reserve Bank of India came out with a notification on 19th June, 2018[1] amending the provisions of priority sector lending targets and classification[2], in relation to affordable housing finance. To give a background, financing affordable housing units qualifies to be a priority sector lending. The term “affordable housing unit” us a defined term and this time RBI has brought amendments to it.
The revised thresholds stand as follows:
| Before the notification | After the notification | |
| Units in metropolitan centres | Loans upto Rs. 28 lakhs and the value of the property not exceeding Rs. 35 lakhs | Loans upto Rs. 35 lakhs and the value of the property not exceeding Rs. 45 lakhs |
| Units in other centres | Loans upto Rs. 20 lakhs and the value of the property not exceeding Rs. 25 lakhs | Loans upto Rs. 25 lakhs and the value of the property not exceeding Rs. 30 lakhs |
The intention of this change is to bring the PSL guidelines in line with the Affordable Housing scheme launched by the Government of India.
Further, the other change that has been brought in by the notification is change in the income limits of the EWS and LIG. Earlier, those families with annual household income of upto Rs. 2 lakhs qualified as EWS families and those with annual household income of upto Rs. 3 lakhs qualified as LIG families. The income levels have now been increased to Rs. 3 lakhs and Rs. 6 lakhs for EWS and LIG families respectively.
With this change the provisions of Master Directions on PSL requirements have been synchronised with the Pradhan Mantri Awas Yojana.
[1] https://rbi.org.in/Scripts/NotificationUser.aspx?Id=11308&Mode=0
[2] https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=10497
PSL Ltd. v. Jotun India Pvt. Ltd. -Interplay between the Companies Act, the SICA and the IBC
/0 Comments/in Insolvency and Bankruptcy /by Vinod Kothari ConsultantsSEBI amends LODR mandating dematerialisation
/0 Comments/in Uncategorized /by Vinod Kothari ConsultantsInvestment by FPIs in securitised debt instruments
/0 Comments/in Capital Markets, FEMA, Securitisation /by Vinod Kothari ConsultantsBy Anita Baid,(anita@vinodkothari.com)(finserv@vinodkothari.com)
Investments by Foreign Portfolio Investors (FPIs) in unlisted debentures and securitised debt instruments (SDIs) issued by Indian companies was allowed pursuant to SEBI notification dated 27th February, 2017[1]. Earlier in November, 2016, Reserve Bank of India (RBI) had also permitted investment by FPIs in unlisted non-convertible debentures and securitised debt instruments issued by Indian companies[2]. The said amendments by the securities market regulator and financial services regulator were the final push which was needed to encourage more FPI investments in India.
Previously, FPIs could invest only in debt securities of companies engaged in the infrastructure sector. This was a clear indication that the government aimed to develop the infrastructure sector in India. But eventually, it seemed that the government did not want to restrict this to infrastructure only and wanted to reap all the benefits for developing a dynamic and facilitating bond market in the country.
Economic development and smooth flow of funds into the economy are the twin sides of the same coin and the government of India has very well taken this into account while amending the FPI regulation. Allowing FPI investments in unlisted debt instruments of Indian companies, was a step by the government to relax the burden which the companies had to bear, while raising funds in the form of equity. The regulation in turn blocked the companies from tapping into fresh funds and listing of debt instruments, which called for additional burden of complying with a host of other regulations.