RBI relaxes thresholds for affordable housing finance

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Financial 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

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Investment by FPIs in securitised debt instruments

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By 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.

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Indian Valuation Standards: Standardizing the rules of valuation in India

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Refer to valuation approaches here- https://vinodkothari.com/2020/09/valuation-approaches-and-methods/

The Curious Case of Home-Buyers: All is Well?

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By Sikha Bansal, (sikha@vinodkothari.com) (resolution@vinodkothari.com)

 

All the hullabaloo surrounding the inclusion of “home-buyers” in the category of financial creditors was put to rest by the promulgation of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 (“the Ordinance”). The Ordinance amends the definition of “financial debt” u/s 5 (8) of the Insolvency and Bankruptcy Code, 2016 (“IBC”) so as to include in clause (f): Read more →

MCA raises curtain on SBO Rules – Notifies final rules with several changes.

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CS Vinita Nair, vinita@vinodkothari.com

CS Nikita Snehil, nikita@vinodkothari.com

Vinod Kothari & Co. | June 14, 2018

Amendment to Section 89 and 90 is one of the key amendments proposed in Companies (Amendment) Act, 2017 (Amendment Act). While, the Amendment Act is being enforced in phases, stakeholders were given the option to provide the public comments on the draft rules[1] in relation to Significant Beneficial Ownership (SBO), which was issued by MCA on Feb 2, 2018. Thereafter, on June 6, 2018, MCA vide its Notification, has enforced the provisions of amended Section 90 of the Companies Act, 2013 and also issued the Companies (Beneficial Interest and Significant Beneficial Interest) Rules, 2018[2] (‘Final Rules’) in relation to SBO. This is one of the most onerous provision rolled out by MCA. The purpose of this Section is to ask companies ‘Parde ke peeche kaun hai? Saamne aao!’. The present Article explains the provisions of the amended Section 90 and the Final Rules. Read more →