Performance Highlights of HFCs / Developments Since Last Meeting - - PowerPoint PPT Presentation

Performance Highlights of HFCs / Developments Since Last Meeting

Department of Regulation & Supervision June 28, 2014

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• 1. Performance Highlights of HFCs
• 2. Regulatory Developments, since December, 2013
• HFCs Issuance of NCDs on Private Placement

Basis (NHB) Directions, 2014

• HFCs (NHB) Directions, 2010
• Policy Circulars
• 3. Grievance Redressal Mechanism for HFCs
• 4. Matters taken-up with MCA, GOI and their Resolutions
• 5. Suggestions Received from HFCs

Presentation Outline

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Trend in Number of Registered HFCs – In the last 10 years

10 20 30 40 50 60

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

46 46 42 43 43 52 52 56 57 60

(Till May 31, 2014)

Trend in Branches/Offices of HFCs – In the last 3 years

As on 31-03-2014 All India Average : 72

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Branches or Offices of HFCs – Spread as on 31-03-2014

Legend : HFCs / Branches or Offices Total Branches/Offices in 2013-14 : 2,505

Trend in HFCs’ Major Assets Outstanding in the last 10 years

(Rs. in crore)

Trend in Outstanding Loans of HFCs – In the last 10 years

(Rs. in crore)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 59111 70534 86155 90179 109222 126824 153189 186438 222225 290427 342388 15847 15692 17576 19441 41339 49712 51804 61343 79456 99790 117301 Other Loans Housing Loans

HFCs’ Performance in 2013-14* (Rs. in crore)

* As reported by HFCs ^ to Total Loans

Details As at end of 31-03-2013 As at end of 31-03-2014 Growth (%) Housing Loans 2,90,427 3,42,388 17.89 Non Housing Loans 99,790 1,17,301 17.55 Total Loans 3,90,217 4,59,689 17.80 Public Deposits 44,179 50,537 14.39 Total Borrowings (excl. Deposits) 3,09,967 3,61,409 16.60 GNPAs 4,316 (1.11%^) 5,226 (1.14%^) 21.09 NNPAs 1,754 (0.45%^) 2,675 (0.58%^) 52.49

• No. of Branches/Offices

2,063 2,505 21.43

Slabs Disbursed Outstanding NPA (%) Upto 2 Lakh 2,377 5,812 10.54 2-5 Lakh 4,345 34,031 3.32 5-10 Lakh 13,525 75,010 1.79 10-25 Lakh 39,298 1,46,406 0.95 Above 25 Lakh 45,041 1,14,277 0.62 Total 1,04,586 3,75,536 1.38

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Slab-wise Housing Loan (Rs.) of PSBs – For 2013-14** (Rs. in crore)

** Based on certain assumptions

Outstanding Housing Loans of Banks in 2012-13 : Rs. 4,75,400 crore Outstanding Housing Loans of Banks in 2013-14 : Rs. 5,46,710 crore *

* - Assuming 15% growth over last year

Trend in Outstanding Housing Loans – In the last 10 years

Notifications issued under NHB Act, 1987 :

HFCs Issuance of NCDs on Private Placement Basis (NHB) Directions, 2014 …

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Details Purpose Shall issue NCDs for deployment of funds on its own Balance Sheet, and not to facilitate resource requests

• f group entities / parent company/ associates

Eligibility NOF > Rs.10 crore as per the Audited Balance Sheet Ratings

• From one of the eligible agencies
• Minimum credit rating of adequate degree of safety

regarding timely servicing of financial obligations Maturily

• Not less than 12 months from the date of issue
• Exercise date of option (put/call) not to fall within the

period of one year from the dale of issue

• No roll-over
• Tenor not more than validity of the instrument’s credit

rating

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Details Investors & Investment Amt.

• Restricted to 49 investors, and identified upfront
• Minimum subscription amount is Rs.25 lakh/Investor

and thereafter in multiples of Rs.5 lakh Limits

• Lower of the limit approved by Board of Directors or

Quantum specified by the Credit Rating Agencies

• Issue to be completed within 30 days of opening

Others

• Board approved policy for resource planning
• Issued within 6 months of Board Authorization
• Information in Offer Document, and Printed/Typed as

‘For Private Circulation Only’

• Auditor’s Certification to Investors
• Debenture Trustee & Security Cover
• No loan against NCDs
• Board Reporting

Notifications issued under NHB Act, 1987 :

… HFCs Issuance of NCDs on Private Placement Basis (NHB) Directions, 2014

Notifications issued under NHB Act, 1987 :

Amendments in HFCs (NHB) Directions, 2010 …

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Amendment/s

• No. NHB.HFC.DIR.10/CMD/2014 dt. 19-03-2014

(17 (1) & 17(1)(A) (i) Advertisement should disclose that the deposits solicited by HFCs are not insured Incorporating a caption/band in electronic media – Reference to Advt. in newspaper , Registration with NHB, …

Notifications issued under NHB Act, 1987 :

Amendments in HFCs (NHB) Directions, 2010 …

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Amendment/s

• No. NHB.HFC.DIR.11/CMD/2014 dt. 13-06-2014 (19)

Requirement to obtain prior approval of National Housing Bank for acquisition or transfer of control of HFCs

(i) any takeover or acquisition of control of a HFC, whether by acquisition of shares or otherwise; (ii) any merger/amalgamation of a HFC with another entity or any merger/amalgamation of an entity with a HFC that would give the acquirer/another entity control of the HFC; (iii) any merger/amalgamation of a HFC with another entity or any merger/amalgamation of an entity with a HFC which would result in acquisition/transfer of shareholding in excess of 10 per cent of the paid up capital of the HFC. (iv) prior written approval of the NHB would also be required before approaching the Court or Tribunal under Section 391-394 of the Companies Act, 1956 or Section 230-233 of Companies Act, 2013 seeking order for mergers or amalgamations with other companies or HFCs

Policy Circulars …

No.59 dt. 24-01-2014 : Central Know Your Customer Registry

• Suggestions on Common KYC templates
• Preparedness for CKYC Registry

No.60 dt. 06-02-2014 : Guidelines

• n

Know Your Customer & Anti Money Laundering Measures - Obligation

• f

HFCs under Prevention

• f

Money Laundering Act, 2002

• Letter issued by Unique Identification. Authority of India containing

details of name, address and Aadhaar number as an officially valid document .

• Address provided by the customer is the same on the document

submitted for identity proof, the document may be accepted as a proof of both identity and address.

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… Policy Circulars

No.61 dt. 07-04-2014 : Reserve Fund under Section 29C of the NHB Act, 1987

Presentation in the annual accounts under the heading 'Notes forming part of the financial statements' from the financial year 2013- 14.

No.62 dt. 27-05-2014 : Creation of Deferred Tax Liability

• n Special Reserve maintained by HFCs under Section

36(1) (viii) of the Income Tax Act, 1961

As a matter of prudence, DTL should be created on Special Reserve created and maintained by HFCs.

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Grievance Registration Mechanism

Details Complaints Opening Balance (As on 01-07-2013) 211 Received During 2013-14 (Till 18-06-2014) 647 Redressed During 2013-14 (Upto 18-06-2014) 710 Closing Balance (Pending as on 18-06-2014) 148

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Grievance Registration & Information Database System (GRIDS)

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• Grievance Registration & Information Database System

(GRIDS) facilitates online registration and tracking of complaint for the complainant.

• GRIDS not only bring in transparency in our Grievance

Redressal Mechanism, but also designed for online updating of responses by NHB/ HFCs.

• Complainant can make use of GRIDS by providing the

required information like name, contact details, application/ deposit/ account number etc. for registration and subsequent status tracking.

• Integrated platform between Complainants, HFCs and

NHB for an efficient and effective implementation of paperless system. https://grids.nhbonline.org.in

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Reference Details Exemption

• f

HFCs from the applicability of the Companies (Acceptance of Deposits) Rules, 2014 As per the draft Rules on Acceptance of Deposits, HFCs registered with NHB were not exempted from the applicability of the said Rules. Issue was taken up by NHB with MCA. As per the Companies (Acceptance of Deposits) Rules, 2014 notified by MCA on 31-03-2014, these rules are also not applicable to HFCs registered with NHB.

Matters taken-up with MCA, GOI and their Resolutions

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Reference Details Creation

• f

Debenture Redemption Reserve Under rule 18(7)(b)(ii) of the Companies (Share Capital and Debentures) Rules, 2014, NBFCs registered with the RBI under Section 45-IA of the RBI (Amendment) Act, 1997, are required to create DRR @25% of the value of debentures issued through public issue as per present SEBI (Issue and Listing of Debt Securities) Regulations, 2008, and no DRR is required in the case of privately placed debentures. However, the said provisions were not applicable to HFCs and DRR @25% a applicable to

• ther companies were required to be created by HFCs.

Issue was taken up by NHB with MCA and the said Rules has since been amended. MCA on 18-06-2014 has issued the Companies (Share Capital and Debentures) Amendment Rules, 2014 and the provisions applicable to NBFCs are now applicable to HFCs as well.

Matters taken-up with MCA, GOI and their Resolutions

Matters taken-up with MCA, GOI and their Resolutions

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Reference Details Private placement of securities Under the draft Rules on Prospectus and Allotment of Securities, provisions of Rules 3.12(5) regarding offer

• r invitation and investment size per person were not

applicable to NBFCs. Issue was taken up with MCA by NHB and under the Companies (Prospectus and Allotment of Securities) Rules, 2014 notified by the MCA on 31st March, 2014, the said provisions which are now covered under Rule 14 (2)(b)&(c), is also not applicable to the HFCs registered with the NHB.

Suggestions received from HFCs …

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Issue

• Creation of DTL on Special Reserve u/s 36(1) (viii) of IT Act
• Creation of Debenture redemption reserve
• Increase in the Tenor of Debentures under Companies Act 2013
• Corporate Social Responsibility -Spending through an appropriation
• Transfer of unclaimed deposits over 7 years to Investor Education

and Protection Fund

• Deduction of Deposits with HFCs u/s 80C of Income tax Act
• SARFAESI powers to HFCs
• Prepayment Charges in case of loans prepaid within one year.
• Standard Asset Provisioning over the tenor of loan or Creation of

Reserve for Standard Assets through appropriation of profit

• Change in the Definition of Commercial Real Estate as per RBI

… Suggestions received from HFCs

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Issue

• Equal deduction in tier I and tier II in respect of Investments in

Subsidiaries/Group Companies exceeding 10% of Owned Fund

• Inclusion of perpetual debt and preference shares in tier I capital
• Permitting Non Residential Premises loans to NRIs
• Placement of Deposit through electronic mode
• Permitting payment of interest in case of premature withdrawal of

deposits between 3 & 6 months

• Permitting premature withdrawal of deposits before 3 months
• Permitting issuance of E-FDR
• Auto renewal of deposits through web- access
• Permission to issued abridged advertisements for public deposits
• Issuance of guidelines for E-KYC

Thank you

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