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 1

Presentation Outline 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 2

Trend in Number of Registered HFCs – In the last 10 years 60 60 57 56 52 52 50 46 46 43 43 42 40 30 20 10 0 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 (Till May 31, 2014)

Trend in Branches/Offices of HFCs – In the last 3 years As on 31-03-2014 All India Average : 72

Branches or Offices of HFCs – Spread as on 31-03-2014 Legend : HFCs / Branches or Offices Total Branches/Offices in 2013-14 : 2,505 5

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

HFCs’ Performance in 2013-14* (Rs. in crore) Details As at end of As at end of Growth 31-03-2013 31-03-2014 (%) 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 3,09,967 3,61,409 16.60 (excl. Deposits) 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 * As reported by HFCs ^ to Total Loans

Slab-wise Housing Loan (Rs.) of PSBs – For 2013-14** (Rs. in crore) 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 ** 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 * 9 * - 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 … Details Purpose Shall issue NCDs for deployment of funds on its own Balance Sheet, and not to facilitate resource requests of 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 11

Notifications issued under NHB Act, 1987 : … HFCs Issuance of NCDs on Private Placement Basis (NHB) Directions, 2014 Details Investors & • Restricted to 49 investors, and identified upfront Investment • Minimum subscription amount is Rs.25 lakh/Investor Amt. 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 12

Notifications issued under NHB Act, 1987 : Amendments in HFCs (NHB) Directions, 2010 … 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, … 13

Notifications issued under NHB Act, 1987 : Amendments in HFCs (NHB) Directions, 2010 … 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 14

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 on Know Your Customer & Anti Money Laundering Measures - Obligation of HFCs under Prevention of 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. 15

… 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 on 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. 16

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 17

Grievance Registration & Information Database System (GRIDS) • 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 18

Matters taken-up with MCA, GOI and their Resolutions Reference Details Exemption of As per the draft Rules on Acceptance of Deposits, HFCs from the HFCs registered with NHB were not exempted from applicability of the applicability of the said Rules. the Companies (Acceptance of Issue was taken up by NHB with MCA. As per the Deposits) Companies (Acceptance of Deposits) Rules, 2014 Rules, 2014 notified by MCA on 31-03-2014, these rules are also not applicable to HFCs registered with NHB. 19

Matters taken-up with MCA, GOI and their Resolutions Reference Details Creation of Under rule 18(7)(b)(ii) of the Companies (Share Capital Debenture and Debentures) Rules, 2014, NBFCs registered with the Redemption RBI under Section 45-IA of the RBI (Amendment) Act, Reserve 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 other 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. 20